Ruby Tuesday to Shut 95 Restaurants as Sales Slide
August 11 2016 - 5:30PM
Dow Jones News
Ruby Tuesday Inc. said it would shut about 13% of its
restaurants as the chain grapples with falling traffic and
declining revenue, trends it expects to persist.
The Tennessee-based restaurant operator said it would close
about 95 underperforming locations next month. Ruby Tuesday counted
724 restaurants in its system as of the end of May, with most of
them owned by the company.
The closures comes as Ruby Tuesday said sales dropped in its
latest quarter, which ended in May, reversing improvement reported
in recent periods. Sales at locations open at least a year fell
3.7%, worse than the 1.7% decline in the year-ago quarter and down
from a 3.1% bounce in the previous three months. Traffic dropped
4.6%, the company said.
"Our fourth quarter was impacted by softness in the casual
dining industry and increased promotional activity by our peers,"
said Chief Executive JJ Buettgen. "Given that we expect the macro
environment to remain challenging for some time, we are taking the
necessary steps to change the trajectory of our business," he said,
adding that employees affected by the decision "will be offered
positions in nearby restaurants where possible."
A spokeswoman didn't immediately return a request for comment on
the number of jobs affected.
Ruby Tuesday isn't alone in closing stores amid dropping sales
and lower foot traffic. Retail giant Macy's Inc. said earlier
Thursday that it would close 100 locations, about 15% of its store
base that represents about 4% of revenue. For retailers, dwindling
traffic is largely the result of shoppers' shift to online options
like Amazon.com, and restaurant chains like Ruby Tuesday—often
found in malls—are feeling the pinch.
Mr. Buettgen said the closures are part of a broader initiative
to prop up profit and reignite sales. Other measures include a
revamped menu and improved salad bar, which the company had
previously announced.
In all for the quarter, Ruby Tuesday reported a loss of $27.6
million, or 46 cents a share, down from a year-earlier profit of
$4.3 million, or 7 cents a share. Excluding restructuring costs,
asset-impairment charges and other items, the company reported a
profit of 10 cents a share, flat from the year-earlier period.
Revenue slid 5.9% to $279.3 million.
Analysts projected a profit of 11 cents a share on $285.0
million in sales, according to Thomson Reuters.
For the newly-started fiscal year, the company expects to earn 5
cents to 9 cents in adjusted earnings per share, with an extra week
boosting per-share profit by 2 cents. Analysts have been looking
for 13 cents for the full year.
While the company said it expects business to remain tough for
some time, it suggested sales would improve over the course of the
year, projecting same-restaurant sales that are flat to up 2%.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
August 11, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Ruby Tuesday, Inc. (NYSE:RT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ruby Tuesday, Inc. (NYSE:RT)
Historical Stock Chart
From Jul 2023 to Jul 2024