Tuesday Morning (NASDAQ:TUEM) stock rose 40% overnight, on top of a 16% gain on Dec. 29, as speculators bet they can profit from its coming delisting.
The company expects its delisting to become final on Jan. 12. It will file papers early next week.
Tuesday Morning is an off-price vendor of home goods and décor based in Dallas, Texas.
Profit From Failure
In its most recent quarterly report, Tuesday Morning said it had nearly 500 stores but that it lost $28 million on sales of $151 million for the quarter ending Oct. 1.
At the time it listed current assets of nearly $148 million. The overnight gains left it with a market capitalization of just $5.5 million. The stock had a reverse split of 1:30 just a month ago.
Tuesday Morning stores are a cross between TJX’s (NYSE:TJX) Home Goods chain and Bed Bath & Beyond (NASDAQ:BBBY). They sell home furnishings, furniture, and accessories for less than department stores. Such retailers have had a tough time when high-end merchants can use online sales and outlet stores to move distressed merchandise. Most Tuesday Morning stores are in upper-income suburban strip malls.
The overnight move only brings Tuesday Morning stock partway to where it was on Dec. 22, when it was trading at $1.85/share. It was expected to open on Dec. 30 at 86 cents/share.
TUEM Stock: What Happens Next?
Speculators believe there’s life after going private. Tuesday Morning won $32 million in financing in September from a group led by Retail Ecommerce Ventures, which also owns the brands Pier One, Linens ‘n Things, Stein Mart, and Modell’s Sporting Goods. Tuesday Morning managers led by CEO Fred Hand also chipped in $3 million at that time.
Getting into Tuesday Morning stock now is a speculation that this isn’t the final chapter for the retailer. Other brands bought by Retail Ecommerce Ventures still do business online, even if their physical stores are gone.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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