MARYVILLE Tenn. Ruby Tuesday Inc. reported Wednesday that its second-quarter loss more than tripled from a year ago and sales continued to decline despite the company’s decisive steps, including restaurant remodels and menu changes, to revitalize the slumping chain.
For the quarter ended Dec. 2, Ruby Tuesday’s net loss totaled $37.4 million, or 73 cents per share, compared with a year-earlier loss of $10.4 million, or 20 cents per share. The latest-quarter results included charges of $56.2 million, or 71 cents per share, from the company’s decision, first reported earlier this month, to close 40 restaurants between the second and third quarters, earmark an additional 35 properties for sale and close another 30 locations over the next few years. The closures would represent nearly 10 percent of its domestic, corporate locations.
The company, which operates or franchises 942 restaurants worldwide, said second-quarter revenues fell 10 percent to $289.8 million. Same-store sales fell 10.8 percent at U.S. corporate restaurants and 6.2 percent at U.S. franchised units.
For the past few years, Ruby Tuesday has worked to remodel its locations and rebrand the chain as an upscale casual-dining concept. The efforts, according to founder and chief executive Sandy Beall will position the company to gain market share when consumer spending recovers.
“Many observers believe the entire segment will need to invest to improve quality, overall value, and find ways to differentiate themselves,” he said. “We have already accomplished this through our quality improvement initiatives and remodeling program that we commenced three years ago and completed towards the end of fiscal 2008.”
Building guest traffic remains a priority for the company and third-quarter plans call for an advertising program that will aggressively promote Ruby Tuesday’s value and a targeted marketing test in the South, where sales have been particularly soft, Beall said.
In its full-year forecast, the company said it still expects same-store sales to fall between 9 percent and 10 percent. It also said it expects to be profitable again in the second half of the year.
The company’s sale of assets and reduced capital expenditures will help it maintain cash and strengthen its balance sheet. The company said it expects to reduce debt by between $80 million and $90 million in its current fiscal year. Through the second quarter, $40 million had already been paid down.