HEATHROW Fla. Sharp declines in same-store sales and impairment and restructuring charges led Ruth’s Hospitality Group Inc. to swing to a net loss in its fourth quarter.
The parent of the Ruth’s Chris Steakhouse and other chains said Friday that the company’s fourth-quarter loss totaled $60.7 million, or $2.60 per share, compared to a profit of $4.1 million, or 18 cents per share, in the same quarter a year earlier.
The latest quarter included an $81.3 million loss on impairment and $8.9 million in restructuring costs. Excluding those charges Ruth’s would have earned 4 cents per share, it said, which was well above analyst expectations that called for a loss. The company also said late Thursday that it had amended its credit facility, which served to relieve some investor concern over debt covenants.
Ruth’s stock price rose 9.5 percent to close at $1.04 on Friday. It has traded between $8.30 and 90 cents per share during the past 52 weeks.
Fourth-quarter revenue increased 12.1 percent, to $99.8 million, which included $19.4 million from Mitchell’s Fish Markets and Mitchell’s Steakhouses, which Ruth’s acquired in February 2008.
Same-store sales fell 18.5 percent at its corporate Ruth’s Chris units and average weekly sales at the Mitchell’s units fell to $67,900 in the latest fourth quarter, compared with an average of $80,800 in the prior-year quarter.
For all of 2008, the company reported a net loss of $53.9 million, or $2.31 per share, on revenue of $405.8 million. In 2007, the company reported net income of $18.1 million, or 78 cents per share, on revenue of $319.2 million.
Michael O’Donnell, president and chief executive of Ruth’s Hospitality, said in a statement: “As we look forward to the 2009 fiscal year, we are committed to making the tough decisions that will continue to strengthen our financial status and enhance our competitive position.”
O’Donnell added that its amended credit agreement would give the company “added flexibility” in a tough economy.
The amended agreement reduced Ruth’s revolving loan commitment from $250 million to $175 million, with additional reductions scheduled to begin Dec. 31 and lasting through the final maturity date of Feb. 19, 2013.
It also decreased Ruth’s fixed charge coverage ratio and increased its maximum leverage ratio. Two new covenants were added, as well, covering a minimum earnings before interest, tax, depreciation and amortization test and restrictions on the company’s capital expenditures. Finally, the changed agreement increased Ruth’s interest rates.
O’Donnell said, “It provides us with additional time to implement various top-line brand initiatives at both Ruth’s Chris and Mitchell’s while we continue to pursue margin improvement through cost savings and synergies.”
Ruth’s Hospitality owns and franchises about 150 upscale-dining restaurants, including Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse.
Contact Ron Ruggless at [email protected].
