MARYVILLE, Tenn. - Jan. 10, 2013 - () - Ruby Tuesday, Inc. (NYSE: RT) today reported financial results for the fiscal second quarter ended December 4, 2012.
JJ Buettgen, President and CEO, commented, “I am honored and excited to be leading this great company and look forward to working with the Board and the management team to drive profitable sales growth and create significant shareholder value going forward. We were pleased to report our second consecutive quarter of positive same-restaurant sales in this challenging economic environment and are intently focused on consistently and profitably growing same-restaurant sales at our Ruby Tuesday concept. However, given the uncertain and volatile consumer spending environment, as well as the level of competitive intensity we have seen in the restaurant sector over the last several months, we are projecting approximately flat same-restaurant sales for the year.
Over the last several weeks I have been working with the Board and the senior management team to shape our long-term vision for the Company. Based on a significant amount of discussion and analysis, and a clear understanding that driving profitable same-restaurant sales at Ruby Tuesday is our first and most critical priority, we have decided to close our 13 Marlin & Ray’s restaurants immediately. While this was a difficult decision to make, we have determined the Marlin & Ray’s brand is not an optimal conversion vehicle for us going forward. For similar reasons, we also have decided to close and exit our one Wok Hay restaurant and seek a buyer for our two licensed Truffles Grill restaurants. Additionally, based on experience gained since our initial involvement in Lime Fresh, we have decided to close two Company-developed Lime Fresh restaurants that we have determined to be outside our updated site selection criteria for the concept. As we make these difficult decisions, we want to let the team members of these closed restaurants know that we appreciate their passion and commitment and we are working to ensure the employees affected by these planned closures are given opportunities at other Ruby Tuesday or Lime Fresh restaurants.
In addition to the aggregate pre-tax impairment charges of $16.9 million incurred in the second quarter in connection with these decisions, we will also incur an estimated $2.0-$5.0 million in pre-tax lease reserves and other charges in the third quarter. Exiting these concepts will enable us to optimally allocate our time, capital, and resources to focus on the successful sales turnaround at our Ruby Tuesday restaurants, in addition to creating value with our Lime Fresh fast casual concept going forward. While these decisions are difficult, we are convinced that this action is appropriate, timely, and beneficial longer term to our shareholders.”
On January 8, 2013 the Board of Directors increased the share repurchase authorization amount by 10 million shares, resulting in 12.7 million shares now authorized for repurchase under the Company’s share repurchase plan.
In closing, Mr. Buettgen said, “We enter the second half of our fiscal year with a clear focus on three key initiatives. First, we are focused on driving profitable same-restaurant sales growth at Ruby Tuesday. We will accomplish this by continuing to refine the quality of our menu, our in-restaurant experience, and the effectiveness of our advertising and promotion efforts. Second, we are focused on prudently growing our Lime Fresh fast casual concept. Our final key initiative is to increase shareholder value by investing our capital to yield attractive returns. While we are cautious near-term given the current economic environment, we believe there is significant opportunity ahead to strengthen our Company and create shareholder value.”
Similar to the first quarter, we made several reporting reclassifications to our prior-year statements of operations for the 13 week period ended November 29, 2011 to better align our financial statement presentation with our peer group. These reclassifications, which had no effect on pre-tax or net loss were primarily in two key areas: 1) Amortization of deferred debt issuance costs and revolving credit facility commitment fees of $0.5 million were reclassified from other restaurant operating costs to interest expense, net; and 2) Corporate and field executive fringe benefits and payroll taxes of $2.0 million were reclassified from payroll and related costs to selling, general, and administrative, net, where the corresponding salary expenses are reported. In the current year quarter, these amounts were $0.8 million and $2.1 million, respectively.
Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, 11 foreign countries, and Guam. As of December 4, 2012, we owned and operated 709 Ruby Tuesday restaurants and franchised 77 Ruby Tuesday restaurants, comprised of 33 domestic and 44 international restaurants. Our Company-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets.
Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RT).
The Company will host a conference call, which will be a live web-cast, this afternoon at 5:00 p.m. Eastern Time. The call will be available live at the following websites:
http://www.rubytuesday.com
http://www.earnings.com
This press release contains various forward-looking statements, which represent our expectations or beliefs concerning future events, including one or more of the following: future financial performance and restaurant growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayments of debt, availability of financing on terms attractive to the Company, payment of dividends, stock and bond repurchases, restaurant acquisitions, conversions of Company-owned restaurants to other dining concepts, and changes in senior management and in the Board of Directors. We caution the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause our actual results to differ materially from those included in the forward-looking statements (such statements include, but are not limited to, statements relating to cost savings that we estimate may result from any programs we implement, our estimates of future capital spending and free cash flow, our targets for annual growth in same-restaurant sales and average annual sales per restaurant, and the benefits of our television marketing), including, without limitation, the following: general economic conditions; changes in promotional, couponing and advertising strategies; changes in our guests’ disposable income; consumer spending trends and habits; increased competition in the restaurant market; laws and regulations affecting labor and employee benefit costs, including further potential increases in state and federally mandated minimum wages, and healthcare reform; guests’ acceptance of changes in menu items; guests’ acceptance of our development prototypes and remodeled restaurants; our ability to successfully integrate acquired companies; mall-traffic trends; changes in the availability and cost of capital; weather conditions in the regions in which Company-owned and franchised restaurants are operated; costs and availability of food and beverage inventory; our ability to attract and retain qualified managers, franchisees and team members; impact of adoption of new accounting standards; impact of food-borne illnesses resulting from an outbreak at either Ruby Tuesday or other restaurant concepts; our ability to complete our planned sale-leaseback transactions; effects of actual or threatened future terrorist attacks in the United States; and significant fluctuations in energy prices.
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Ruby Tuesday, Inc.
Greg Ashley
865-379-5700
Our Company-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets.