HEATHROW Fla. Ruth’s Hospitality Group Inc. said Wednesday its full-year profit expectation is “no longer a realistic goal” as sales for the upscale steakhouse and seafood operator move further and further into negative territory with the close of 2008.
Year-to-year same-store sales at corporate Ruth’s Chris Steak House restaurants dropped 15 percent in October, the company reported, a freefall that followed a September-ended third quarter drop of 6.9 percent. Ruth’s Hospitality typically does not release monthly same-store sales figures, but said it did so because of the volatility of sales trends and its effect on annual earnings.
The company said it would earn between 33 cents and 35 cents per share for the full year — down from previous guidance of between 55 cents per share and 60 cents per share — if same-store sales remain near October levels for the remainder of the fourth quarter. A year ago, the company posted a profit of 78 cents per share.
Ruth’s Hospitality has already said it would reduce development, pursue sale-leaseback transactions and continue to preserve cash to battle economic pressures. Late last month it also announced job cuts at its corporate support center.
“The current economic environment continues to adversely affect our results,” president and chief executive Michael O’Donnell said in a statement. “In light of these circumstances, we’re taking a very conservative approach to the business, essentially managing in-line with internally generated free cash flow.”
The company added that the reduction of debt, which stands at about $166.9 million, also is a primary goal. Ruth’s closed a sale-leaseback deal on five restaurants during its September-ended third quarter and used proceeds of $17.6 million to pay down debt.
For the quarter ended Sept. 28, Ruth’s swung to a net loss of $500,000, or 2 cents per share, from a year-ago profit of $1.8 million, or 8 cents per share.
Various costs, as a percentage of sales, rose 100 basis points or more not only because of the company’s reduced same-store sales, but also because of additional pre-opening costs for new restaurants and higher marketing and advertising spending surrounding Ruth’s Chris Summer Celebration promotion.
Total corporate revenue increased 41.4 percent to $99.3 million, a result that included $22.1 million from the company’s Mitchell’s Restaurant Group acquisition that closed February.
The company owns the Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts, which together total more than 150 corporate or franchised locations.