Tuesday Morning’s Day: Activists Arrive, CEO Fired, Guidance Cut


In what might be one of the fastest activist investor victories in history, Tuesday Morning has fired CEO Kathleen Mason and slashed its guidance for the year only hours after Becker Drapkin Management disclosed a 5.02% stake and criticized the retailer’s leadership.

Shares are down 9% after hours to $4 after leaping 8.6% in the regular session following Becker Drapkin’s filing.

And for Becker Drapkin, that was only one Tuesday-named company that it shook up today: Ruby Tuesday, the burger and dining chain, announced tonight that founder, Chairman and CEO Sandy Beall would be stepping down. Becker Drapkin had gained seats on Ruby Tuesday’s board last July after agitating for change there as well.

The firm, run by Steven R. Becker and Matthew A. Drapkin, has also previously agitated in teen retailer Hot Topic and has current activist filings in several smaller companies.

On  Tuesday Morning, the firm sent a letter Tuesday touting its previous work on Hot Topic and blasting the management, including Mason.

“Put simply, Ms. Mason has led an extraordinary destruction of shareholder value in stark contrast to the success of Tuesday Morning’s peer group,” the letter said. “As one of your largest shareholders, we do not wish to bring about distractions. Absent significant changes to the Board composition, however, we are concerned that the value destruction experienced by Tuesday Morning will continue.”

Tuesday Morning, a closeout retailer, reported after the close that it had relieved Mason as of yesterday and named COO Michael Marchetti as interim CEO. Two other executives were also promoted and another board member, Sheldon Stein, resigned.

Adding to the turmoil, Tuesday Morning cut into its full-year guidance, giving no reasons for the cuts.

From Dow Jones reporters Tess Stynes and Nathalie Tadena:

The company now expects full-year earnings of $810 million to $815 million and per-share earnings of 11 cents to 15 cents, before costs associated with the replacement of the CEO. The company had previously forecast earnings of 13 cents to 16 cents a share and revenue of $815 million and $820 million. It expects same-store sales to decline by 3.2% to 3.9%, compared with its earlier view of a 3.0% to 3.75% decline.

As for Ruby Tuesday, Becker Drapkin said last June it would be seeking board seats. One month later, Becker and Drapkin were both appointed to the board.

Beall, who has run the company since opening its first restaurant in 1972, will continue in his roles at the company until a replacement is named. He said he looked “forward to taking some time off and to pursuing personal ventures.”




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