Ruby Tuesday Inc., the parent company of casual-dining chain Ruby Tuesday and the fast-casual Lime Fresh Mexican Grill brand, reported a significant net loss during its June 4-ended fourth quarter, with net income dropping 401 percent year over year.
Chief executive James J. “JJ” Buettgen said that the loss was likely due to the fact that the company is in a transition period.
Earlier this year, Ruby Tuesday Inc. jettisoned its non-core concepts — Wok Hay, Truffles Grill, and Marlin & Rays — deciding instead to focus on its core Ruby Tuesday namesake restaurants. The company also noted it would shift its positioning from upscale-casual dining down to casual dining in order to be more approachable for value-conscious consumers.
“The fourth quarter proved very challenging,” Buettgen said during an earnings call with analysts. “While we are clearly disappointed with our results, we have made significant progress on our efforts to reposition Ruby Tuesday for long-term success and to strengthen our organization.”
During the part of 2013, Buettgen said the company also hired a slew of new executives, including Todd Burrowes, chief operating officer and president of Ruby Tuesday concept; Jill Golder, senior vice president of finance; Jeff Wood, chief development officer; and Mark Bibby, vice president of culinary.
Buettgen himself started at the company late last year after founder and chief executive Sandy Beall stepped down from the post.
Bibby has helped Ruby Tuesday come up with new food platforms, Buettgen said, which will be rolled out to guests throughout fiscal 2014. “Based on what we’ve experienced at our in-restaurant testing, these new products could soon comprise as much as 15 to 20 percent of our menu mix,” he said. “Ruby Tuesday guests will soon begin enjoying new, more innovative, approachable and affordable food items in our restaurants systemwide before the end of the first quarter.”
Bob Derrington, formerly of Northcoast Research and now senior restaurant analyst at Wunderlich Securities, said that the company’s poor earnings report is understandable during this time of transition.
“You know, I think to be fair, JJ [Buettgen] is continuing to strengthen and transition the company. I think the company is still early on his plan. It probably won’t be until later this [calendar] year that we start to see results,” Derrington said, adding that the casual-dining segment has seen a lot of pressure during the past three months.
Net loss for the quarter was $29.1 million, or 49 cents per share, down from a loss of $5.8 million, or 9 cents per share the year prior. When excluding special items such as money related to the chief executive transition, retirement and severance costs, a deferred tax valuation allowance, and other expenses, net income from continuing operations was $7 million, or 12 cents per share, down from $12.1 million, or 19 cents per share in the year-earlier period.
Revenue for the quarter was 316.1 million, falling from 357.9 million in the prior-year quarter.
During the fourth quarter, same-store sales dropped 3.1 percent at company-owned Ruby Tuesday units and decreased 5.1 percent at domestic Ruby Tuesday franchise restaurants. During the full year, same-store sales dropped 2.1 percent at domestic franchise Ruby Tuesday restaurants.
Ruby Tuesday executives project same-restaurant sales for fiscal 2014 will be in the high-single digits, with improvement throughout each quarter next year.
For the full year, Ruby Tuesday reported a net loss of $39.4 million, or 65 cents per share. Revenue for fiscal year 2013 was 1.25 billion, decreasing from 1.31 billion the prior year.
Maryville, Tenn.-based Ruby Tuesday Inc. has 783 namesake units, 77 of which are franchised. The company also has 24 company-owned and franchised Lime Fresh units systemwide.