Tuesday Morning Corp. (TUES) recently reported fiscal 2010 second quarter results. The company posted a strong 45% growth in net income to $18.5 million, from $12.7 million in the year-ago quarter. Earnings per share came in at 43 cents per share, which topped the Zacks Consensus Estimate by 2 cents.
 
The company recorded a 6.2% growth in sales to $289.6 million from $272.7 million in the prior year quarter. The increase was primarily driven by a 5.1% growth in same-store sales due to a 5.3% rise in store traffic partially offset by 0.3% decline in average ticket size. Moreover, sales were also helped by the addition of 8 stores during the reported quarter.
 
Tuesday Morning’s gross profit expanded by 8.5% year over year to $109.5 million, while gross margin improved by 80 basis points (bps) to 37.8%. The improvement in gross margin was primarily the result of lower merchandise markdowns and reduced shrinkage and transportations costs. Selling, General and Administrative expenses (SG&A) decreased 1.3% to $79.3 million, while as a percentage of sales SG&A declined by 210 bps to 27.4%. Accordingly, operating income recorded a strong growth of 46.6% year-over-year to $30.2 million, while operating margin increased by 290 bps to 10.4%.
 
Tuesday Morning ended the quarter with cash and cash equivalents of $57.7 million and no long-term debt, compared to $5.8 million of cash and $2 million in long-term debt in the year-ago quarter. During the first-half of the current fiscal, the company generated $54.7 million of cash from operations and deployed $8.4 million towards capital expenditure.
 
Moving forward, Tuesday Morning continues to expect sales for the full fiscal 2010 to range between $805 million and $815 million while earnings per share is expected in a range of 6 cents to 10 cents per share. The guidance remains in-line with the Zacks Consensus Estimate of 9 cents per share, which has increased by 18 cents over the past month.
 
Tuesday Morning is a closeout retailer of upscale home furnishings, gifts and related items in the U.S. As of Dec 31, 2009, the company operated 858 stores across 43 states.
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