Here we go again: Another retailer reports slashed earnings because of the sluggish economy.

With nearly every retailer affected (discount king Wal-Mart (NYSE:WMT) tempered its outlook, and trendy retailer Aeropostale (NYSE:ARO) was also flying lower), the entire sector appears to be in disarray. Yesterday, it was time for Tuesday Morning (NASDAQ:TUES) to face the music. The discount home accessory retailer and Income Investor selection was hoping to survive its earnings announcement with minimal damage.

Unfortunately, the news wasn't good; Tuesday Morning reported a nearly 30% drop in earnings to $2 million, or $0.05 per share. However, its stock price was virtually unchanged, since the drop was predicted last quarter. Meanwhile, sales improved 5.6% to $219.4 million, while comps edged 0.1% higher.

However, like a good investor, Tuesday Morning is taking advantage of the bitter days caused by economic uncertainties, knowing full well the sun will once again shine. The company benefited from the "abundance of close-out goods in the market by executing inventory buys on high-quality merchandise" and bulked up its inventory selection. Purchasing goods on the cheap should help increase margins in the long run and position the company for strong growth in the upcoming holiday season.

Looking ahead to the second half of the year, Tuesday Morning expects to see continued difficulties in the retail market. However, it stood by its earlier guidance of $0.85 to $0.90 per share for the year. It actually improved its comps expectations, projecting comps to range from flat to a 1.5% increase, with no mention of the possibility that they could fall as much as 2.5%, as was indicated last quarter.

Tuesday Morning is doing its best to survive the attack on retailers. However, its focus on the home market, which shoppers have abandoned, makes it even more difficult to maintain positive momentum. The fact that its stock price has fallen so far this year, coupled with its its generous dividend payment, offers investors reason to remain hopeful. Unfortunately, the dividend payment may be the only gain available for the near future.

Wal-Mart is a Motley Fool Inside Value recommendation. Tuesday Morning is an Income Investor selection. 

Fool contributor Mike Cianciolo owns shares of Wal-Mart, but no other company in this article. The Fool has a disclosure policy.