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Ruby Tuesday’s improving same-store sales drew the attention of analysts.

Raymond James analyst Bryan C. Elliott, in a note that reiterated the firm’s “underperform” rating on Ruby Tuesday stock, said the third-quarter results “reflected the first sequential improvement in both comps (though still negative) and margins in several quarters.”

The Raymond James team raised a concern about how Ruby Tuesday’s real estate holdings were being valued in the market. The company said it is selling some of its owned real estate as it closes the locations.

“We continue to believe the market may be overvaluing the company’s underlying real estate assets,” Elliott wrote. “While a handful of recent transactions generated average proceeds of $1.6 million per unit, this seems too high an average to apply to its entire portfolio given current depressed per store sales and cash flow metrics.”

Late last year, Ruby Tuesday brought in outside consultants to help identify cost savings in the company.

Michael O. Moore, chief financial officer, told analysts that the review identified opportunities to reduce costs of goods sold by $6 million a year and cut administrative expenses by $7 million a year.

“All initiatives have been implemented and are delivering the projected savings,” Moore said. “These initiatives are expected to save $3 million in the fourth quarter and delivered a targeted annual savings in fiscal 2015.”

Moore said the company continued to review the business to look for other efficiencies and cost reductions in the supply chain, restaurant operations and marketing.

Ruby Tuesday on Wednesday reported a loss of $7.4 million, or 12 cents per share, from a profit of $2.2 million, or 4 cents a share, in the same quarter last year. Revenue fell 3.8 percent to $295.6 million, from $307.4 million in last year’s quarter.

Ruby Tuesday did not offer fiscal guidance for the fourth quarter, but it said it anticipated same-store sales to range between down 1 percent and up 1 percent.

The company also announced Wednesday the appointment of two new board members: Mark Addicks, chief marketing officer at General Mills; and Donald Hess, chief executive of investment firm Southwood Partners and a former executive of retail department stores Saks and Parisian Inc.

Besides the closure of 24 company-owned Ruby Tuesday restaurants in the third quarter, the company closed one Lime Fresh unit. Ruby Tuesday ended the quarter with 679 company-owned and 76 franchised units. It also had 28 Lime Fresh restaurants, 20 company-owned and eight franchised.

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless