Tuesday Morning, the home-furnishings-centric off-pricer that tumbled into Chapter 11 just two years ago, only to find itself back in financial trouble as the country emerged from pandemic conditions, has secured new financing that points the company in a precarious new direction. About $35 million in new funding arrived earlier this week from Retail Ecommerce Ventures, which, along with its coinvestor, Ayon Capital, will now control Tuesday Morning’s board and seemingly its management, even as existing senior executives remain in place.

These days, getting new working capital usually comes with a number of financial strings, and this deal fits that bill. REV is well-known as a bottom-feeder serial buyer of down-and-out retail brands. Its current portfolio includes such longtime home furnishings nameplates as Linens N’ Things and Pier 1, as well as Stein Mart, Modell's Sporting Goods, RadioShack and Dressbarn.

The word so far from the investors, who are essentially the controlling owners of the company, is that they will seek to build Tuesday Morning’s nonexistent e-commerce business while also bringing the Pier 1 brand into its assortment. While Tuesday Morning does sell some nonhome merchandise, it has historically focused on home furnishings (starting with its origins when it only opened on select days of the month—hence the now-obsolete name).

Tuesday Morning filed for bankruptcy in May 2020: With no online footprint and closed stores, it had no way to reach shoppers early in the pandemic. Even prior to COVID, the company had been struggling; after the Chapter 11 filing, it closed about a third of its locations and refocused on the remaining 500 or so. For about a year, as the home furnishings business boomed during stay-at-home conditions, the retailer did well. More recently, its sales have sagged and it has fallen back into the red. According to the e-newsletter Retail Dive, by mid-August S&P Global Market Intelligence had named Tuesday Morning one of its most vulnerable retail companies, “with a market-implied one-year default probability of 34.3 [percent], based on trading volatility, liabilities and other data.” Tuesday Morning stock was trading at about 20 cents a share as of this week, down from around $4.70 per share in June 2021 at the height of the home sales surge.

This new financing would appear to keep the company afloat for now—but based on REV’s business model, it’s quite conceivable that the retailer could close its stores completely and function as an online-only brand. That has been the case for LNT and Pier 1, while RadioShack continues with a mere handful of franchised physical locations.

Legacy brick-and-mortar retail brands that are reduced to digital-only entities are often called “zombie brands”—and rightfully so. They often bear little if any resemblance to the thriving shopping hubs they once were and end up attracting shoppers with long memories. That is not to say they can’t be successful, and REV seems to have built a viable model with its stable of nameplates. But don’t be surprised if sometime in the not-too-distant future you go to visit a Tuesday Morning store and it’s gone. Zombies rarely show their face in person.

Homepage image: ©Brett/Adobe Stock

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Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.