Ruby Tuesday, Inc. Reports Second Quarter Results

MARYVILLE, Tenn.--(BUSINESS WIRE)--Jan. 9, 2008--Ruby Tuesday, Inc. (NYSE: RT) today reported a diluted loss per share of $0.20 on a net loss of $10.4 million for the Company's second quarter of fiscal 2008, which ended on December 4, 2007. This compares to diluted earnings per share of $0.28 on net income of $16.7 million for the second quarter of the prior year. The diluted per share impact of costs associated with the Company's remodel initiative in the second quarter of fiscal 2008 was $0.07.

Quarterly Highlights

As previously reported, second quarter fiscal 2008 same-restaurant sales at Company-owned Ruby Tuesday restaurants decreased 10.8%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 8.7%, as compared to a decrease of 0.2% and an increase of 4.0% at Company-owned and domestic franchise Ruby Tuesday restaurants, respectively, in the second quarter of the prior year.


Second quarter fiscal 2008 same-restaurant sales:

Second
September October November Quarter
--------- ------- -------- -------
Company-Owned -10.4% -10.8% -11.3% -10.8%
Domestic Franchise -8.0% -7.5% -10.7% -8.7%


Other highlights for the 13-week second quarter:

-- Total revenue decreased 4.7% over the same period of the prior
year.

-- Average restaurant volumes at Company-owned Ruby Tuesday
restaurants decreased 10.2% from the same period of the prior
year.

-- The Company opened five new Ruby Tuesday restaurants during
the quarter and acquired twenty-five restaurants from two
Michigan franchisees. No restaurants were closed during the
quarter.

-- Aside from the restaurants sold to the Company, domestic and
international franchisees opened four new Ruby Tuesday
restaurants during the quarter and none were closed.

-- Sales at domestic and international franchise Ruby Tuesday
restaurants (which is the basis for determining royalty fees
included in franchise income on the Company's operating
statement) totaled $98,173,000 and $114,791,000 for the second
quarter of fiscal 2008 and 2007, respectively. Fiscal 2008
sales at franchise restaurants were reduced due to the
acquisitions of the Michigan franchisees in the second quarter
of fiscal 2008, and the prior acquisitions of the West Palm
Beach franchisee on the first day of fiscal 2008, and the
South Florida franchisee in the third quarter of fiscal 2007.

-- Capital expenditures for new restaurants and routine
capitalized improvements at existing restaurants were $20.0
million for the quarter.

-- Capital expenditures related to the Company's remodel
initiative were $20.6 million for the quarter.

-- The Company had 51.7 million shares of common stock
outstanding at the end of the quarter.

-- Based on the uncertainty of sales, our current models reflect
that we may be in violation of debt covenants in the next 12
months. We are not currently in default but, because of
accounting rules, we have reclassified much of our long-term
debt as current. We will be working with our lenders to obtain
a modification of covenants for future periods and expect a
favorable outcome.


Dividend Policy

The Board of Director's revised the Company's dividend policy to provide for an annual dividend payment which the Board will review for payment in August 2008. The Board remains committed to a dividend policy as previously stated but believes moving to an annual payment to be prudent based on current operating performance and the economic outlook.

Sandy Beall, Founder and CEO, commented, "We do believe we have the right plans and strategies in place to build a much stronger concept and brand for the long-term. We do not think this is a brand issue and our guest research confirms that our food, service, and restaurants are better than they have ever been and improving.

We do have a segment and sales issue, and we also have an earnings issue which we will get corrected. We do not believe we have an operations or free cash flow issue. While timing has not been perfect considering the industry, we will have the majority of our investments in our food and service initiatives as well as the reimaging of over 650 restaurants behind us after this year. We believe we will be very well positioned for solid earnings, free cash flow, and performance in the future."

Fiscal 2008 Guidance

For fiscal 2008, the Company is now targeting diluted earnings per share of $0.40 to $0.60 based on same-restaurant sales of down 6.0% to 8.5% at Company-owned restaurants. The estimate for fiscal 2008 diluted earnings per share includes projected expenses incurred in our remodel initiative of $0.16 to $0.18, of which $0.13 to $0.15 is related to the accelerated depreciation of existing assets and approximately $0.03 is related to incremental depreciation on new assets net of the reduction from the related write-offs. Year to date through the Company's second fiscal quarter, approximately $0.12 has been expensed for the remodel initiative. Additional assumptions used to determine the targeted range include the following:


-- Approximately 20 Company-owned openings for the year;

-- 15 to 20 franchise openings for the year;

-- Investments in labor and food cost;

-- $65-$75 million in capital expenditures for the year for new
restaurants and routine capitalized improvements at existing
restaurants; and

-- $50-$55 million in capital expenditures for the
above-mentioned remodeling of Company restaurants during the
fiscal year.


Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, Puerto Rico, and 12 foreign countries. As of December 4, 2007, the Company owned and operated 721 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 169 and 54 restaurants, respectively.

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.fulldisclosure.com

Special Note Regarding Forward-Looking Information

This press release contains various forward-looking statements which represent the Company's 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 repayment of debt, availability of debt financing at terms attractive to the Company, payment of dividends, stock repurchases, and restaurant and franchise acquisitions and re-franchises. The Company cautions the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements, including, without limitation, the following: changes in promotional, couponing and advertising strategies; guests' acceptance of changes in menu items; changes in our guests' disposable income; consumer spending trends and habits; mall-traffic trends; increased competition in the restaurant market; weather conditions in the regions in which Company-owned and franchised restaurants are operated; guests' acceptance of the Company's development prototypes and remodeled restaurants; laws and regulations affecting labor and employee benefit costs, including further potential increases in federally mandated minimum wage; costs and availability of food and beverage inventory; the Company's ability to attract qualified managers, franchisees and team members; changes in the availability and cost of capital; impact of adoption of new accounting standards; impact of food-borne illnesses resulting from an outbreak at either Ruby Tuesday or other restaurant concepts; effects of actual or threatened future terrorist attacks in the United States; significant fluctuations in energy prices; and general economic conditions.


RUBY TUESDAY, INC.

Financial Results For the Second Quarter of Fiscal Year 2008
(Amounts in thousands except per share amounts)


13 Weeks 13 Weeks
Ended Percent Ended Percent
December 4, of December 5, of Percent
2007 Revenue 2006 Revenue Change
-------------------- -------------------- -------

Revenue:
Restaurant sales
and operating
revenue $317,393 98.9 $333,316 99.0
Franchise revenue 3,530 1.1 3,503 1.0
----------- -----------
Total revenue 320,923 100.0 336,819 100.0 (4.7)

Operating Costs and
Expenses:
(as a percent of
Restaurant sales
and operating
revenue)
Cost of
merchandise 89,018 28.0 91,378 27.4
Payroll and
related costs 109,525 34.5 104,314 31.3
Other
restaurant
operating
costs 69,786 22.0 60,823 18.2
Depreciation
and
amortization 25,140 7.9 18,993 5.7
(as a percent of
Total revenue)
Loss from Specialty
Restaurant Group,
LLC bankruptcy (7) 0.0 163 0.0
Selling, general and
administrative, net 32,734 10.2 30,897 9.2
Equity in losses of
unconsolidated
franchises 1,612 0.5 706 0.2
----------- -----------
Total operating
costs and expenses 327,808 307,274
----------- -----------

(Loss)/Earnings
before Interest and
Taxes (6,885) (2.1) 29,545 8.8 (123.3)

Interest expense,
net 8,281 2.6 4,589 1.4
----------- -----------

Pre-tax
(Loss)/Profit (15,166) (4.7) 24,956 7.4 (160.8)

Provision for
income taxes (4,815) (1.5) 8,227 2.4
----------- -----------

Net (Loss)/Income $(10,351) (3.2) $ 16,729 5.0 (161.9)
=========== ===========



(Loss)/Earnings Per
Share:
Basic $ (0.20) $ 0.28 (171.4)
=========== ===========
Diluted $ (0.20) $ 0.28 (171.4)
=========== ===========

Shares:
Basic 51,380 58,793
=========== ===========
Diluted 51,380 59,266
=========== ===========


26 Weeks 26 Weeks
Ended Percent Ended Percent
December 4, of December 5, of Percent
2007 Revenue 2006 Revenue Change
-------------------- -------------------- -------

Revenue:
Restaurant sales
and operating
revenue $660,387 98.9 $668,127 98.9
Franchise revenue 7,333 1.1 7,351 1.1
----------- -----------
Total revenue 667,720 100.0 675,478 100.0 (1.1)

Operating Costs and
Expenses:
(as a percent of
Restaurant sales
and operating
revenue)
Cost of
merchandise 181,711 27.5 181,048 27.1
Payroll and
related costs 219,466 33.2 207,857 31.1
Other
restaurant
operating
costs 136,673 20.7 121,967 18.3
Depreciation
and
amortization 48,733 7.4 37,375 5.6
(as a percent of
Total revenue)
Loss from Specialty
Restaurant Group,
LLC bankruptcy 157 0.0 251 0.0
Selling, general and
administrative, net 62,487 9.4 60,324 8.9
Equity in losses of
unconsolidated
franchises 2,458 0.4 638 0.1
----------- -----------
Total operating
costs and expenses 651,685 609,460
----------- -----------

(Loss)/Earnings
before Interest and
Taxes 16,035 2.4 66,018 9.8 (75.7)

Interest expense,
net 15,380 2.3 8,883 1.3
----------- -----------

Pre-tax
(Loss)/Profit 655 0.1 57,135 8.5 (98.9)

Provision for
income taxes (84) 0.0 18,856 2.8
----------- -----------

Net (Loss)/Income $ 739 0.1 $ 38,279 5.7 (98.1)
=========== ===========



(Loss)/Earnings Per
Share:
Basic $ 0.01 $ 0.65 (98.5)
=========== ===========
Diluted $ 0.01 $ 0.65 (98.5)
=========== ===========

Shares:
Basic 51,763 58,467
=========== ===========
Diluted 51,964 58,894
=========== ===========

RUBY TUESDAY, INC.

Financial Results For the Second Quarter
of Fiscal Year 2008
(Amounts in thousands)

December 4, June 5,
CONDENSED BALANCE SHEETS 2007 2007
------------------------------------------ ----------- ----------
Assets
Cash and Short-Term Investments $7,886 $25,892
Accounts and Notes Receivable 10,384 14,773
Inventories 22,712 20,032
Income Tax Receivable 888 -
Deferred Income Taxes 4,772 4,839
Assets Held for Disposal 36,878 20,368
Prepaid Rent and Other Expenses 14,850 14,542
----------- ----------

Total Current Assets 98,370 100,446

Property and Equipment, Net 1,091,639 1,033,336
Goodwill, Net 18,927 16,935
Notes Receivable, Net 4,956 9,212
Other Assets 69,162 69,927
----------- ----------

Total Assets $1,283,054 $1,229,856
=========== ==========

Liabilities
Current Portion of Long Term Debt,
including Capital Leases $548,068 $1,779
Income Tax Payable - 5,730
Other Current Liabilities 148,067 116,249
Long-Term Debt, including Capital
Leases 43,673 512,559
Deferred Income Taxes 28,358 37,107
Deferred Escalating Minimum Rents 40,991 39,824
Other Deferred Liabilities 78,056 77,282
----------- ----------

Total Liabilities 887,213 790,530

Shareholders' Equity 395,841 439,326
----------- ----------

Total Liabilities and
Shareholders' Equity $1,283,054 $1,229,856
=========== ==========


CONTACT: Ruby Tuesday, Inc.
Shannon Hepp, 865-379-5700

SOURCE: Ruby Tuesday, Inc.

###

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