MARYVILLE Tenn. Ruby Tuesday Inc. posted another quarter of financial results that topped both corporate and Wall Street expectations, as both cost cutting and improved consumer traffic paid dividends for the struggling casual-dining company. —
But unlike the company’s prior quarter, when similar news on improved results spurred a huge stock gain, investors were less impressed this time and the company’s stock fell after the latest quarterly results. During this next fiscal earnings season, analysts say, casual-dining companies will continue to report “less bad” same-store sales declines, typically on easier comparisons from year-ago results, as well as bottom-line improvements from cost-cutting, just as they had in the first quarter. The news, however, is less impressive the second time around. —
“Unlike the first quarter, in which surprise cost savings propped up earnings per share despite lackluster sales, second-quarter earnings may not be the same catalyst for restaurants stocks,” said securities analyst John Glass at Morgan Stanley. “Reaction from early reporters like Darden and Ruby Tuesday—both [earnings] beats, but conservative guidance and shares traded down—suggest that investors are no longer satisfied with just ‘less bad’ and need to see greater hope of top-line growth.” —
Most casual-dining companies are working to spur sales through discounting. P.F. Chang’s China Bistro introduced this month five regular entrées priced at $9.95 each in its new “Regional Classics Menu.” The dishes include Hunan pork, Mandarin chicken, Hong Kong beef with snow peas, Shanghai shrimp with garlic sauce, and Canton chicken and mushrooms. —
At T.G.I. Friday’s new salads and sandwiches were priced at $5 each and at Applebee’s, lunch-time combo meals start at $5.99 and a dinner promotion highlights one appetizer and two entrées for $20. —
At Maryville-based Ruby Tuesday, profit rose to $14.4 million, or 28 cents per share, for its fiscal fourth quarter ended June 2, from $13.9 million, or 27 cents per share, in the same quarter a year ago. Fourth-quarter revenue fell 7.1 percent to $317.3 million, mainly because of 49 fewer restaurants in operations versus last year, including the 48 restaurants closed in the third quarter. —
The company’s fourth-quarter results beat analyst expectations of 19 cents in earnings and included a year-over-year guest traffic gain for the first time in more than a year. That was driven by sales of higher-end items like lobster and additional local marketing and advertising efforts, the company said. —
“This is our best relative performance in well over a year,” said Sandy Beall, chairman, president and chief executive, during a conference call with investors. “We believe [it] not only reflects the success of our new marketing focus but also indicates [that] our repositioning is beginning to resonate as we get guests in to see the difference in our food, the way our people look and the way the restaurants look.” —
For a few years Ruby Tuesday has undertaken a brand repositioning aimed at creating a chain with more upscale food, décor and service. Today, the chain sees itself as competing against Olive Garden and Outback Steakhouse, rather than traditional bar-and-grill brands like Applebee’s or T.G.I. Friday’s. Ruby Tuesday still is offering lower-priced value items, especially today as consumers look to spend less. But sales of the chain’s specialty dinner items, like ribs, steaks or seafood, increased by 10 basis points, the company said. —
The operator or franchisor of 901 restaurants worldwide, which makes it one of the largest casual-dining chains, said fourth-quarter same-store sales fell 3.2 percent at corporate units and 6.9 percent at domestic franchised locations. The results included positive year-over-year traffic. The latest same-store sales declines also were much improved from previous declines of 6.8 percent in the third quarter and 10.8 percent in the first half of the year at corporate units. —
For the full fiscal year, Ruby Tuesday reported a loss of $17.9 million, or 35 cents per share, compared with a profit of $26.4 million, or 51 cents per share, a year earlier. The latest-year results included more than $73 million in impairment charges for restaurant closures and good-will. Fiscal 2009 revenue fell 8.2 percent to $1.25 billion.— [email protected] —
