What: Shares of Tuesday Morning Corporation (NASDAQ:TUES) fell 12.6% Friday after the off-price retailer released mixed fiscal second-quarter 2016 results.

So what: On one hand, quarterly revenue rose 6.1% year over year, to $319.9 million, helped by an 8.4% increase in comparable-store sales and well above analysts' expectations for revenue of $306.1 million. On the other hand, that translated to a 20% decline in net income, to $18.9 million, or $0.43 per share, significantly below analysts' consensus estimates for earnings to increase slightly to $0.55 per share.

After lauding the strong comps and top-line performance, Tuesday Morning CEO Steve Becker explained his company continued to accelerate investments in store real estate, a "long overdue restructuring of our supply chain capabilities," and marketing initiatives during the quarter.

In particular, Becker went on to say:

While we have continued to accelerate completion of the Phoenix DC facility, as we have previously discussed, the timeline is longer than originally contemplated when the project was launched over a year ago, resulting in additional IT and consulting costs. In addition, we incurred increased freight and labor costs as a result of the demands on our Dallas facility during the peak Christmas selling season as well as store labor costs associated with handling this increased volume of freight, all of which pressured our operating margins.

Now what: As it stands, Tuesday Morning expects to complete the Phoenix facility and operational efficiency efforts to alleviate that pressure in the first half of fiscal 2017. In addition, the company continues to expect roughly $6 million to $8 million in expenses related to the original delays, two-thirds of which will be recognized in the second half of this fiscal year. 

In the meantime, while Tuesday Morning is certainly delivering on the revenue front, it's hard to blame the market for bidding shares down given continued delays and additional incremental costs. Though Tuesday Morning should ultimately emerge a stronger company, I suspect its stock will remain depressed until we see signs that these initiatives are actually bearing fruit on the bottom line.

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