Ruby Tuesday (RT, Financial), an American multinational restaurant, posted weak second quarter results. Headquartered in Maryville, Tennessee, it has 744 company-owned and/or franchise Ruby Tuesday brand restaurants in 44 states, 13 foreign countries and Guam, in addition to 28 company-owned and/or franchise Lime Fresh brand restaurants in six states and the District of Columbia.
As of December 2, 2014, it owned and operated 663 Ruby Tuesday restaurants and franchised 81 Ruby Tuesday restaurants, comprised of 30 domestic and 51 international restaurants.
Second-quarter results
- Total revenue from continuing operations of $262.7 million compared to $276.2 million in the same quarter of the prior year, a decrease of $13.5 million, reflecting the closing of 42 restaurants since the second quarter of the prior year and a decrease in same-restaurant sales at company-owned Ruby Tuesday restaurants.
- Same-restaurant sales decreased 1.0% at company-owned Ruby Tuesday restaurants compared to the same quarter of the prior year. Same-restaurant guest counts at company-owned Ruby Tuesday restaurants were down 1.3% compared to the same quarter of the prior year.
- Net loss from continuing operations of $9.3 million compared to net loss of $34.7 million from continuing operations for the same quarter in the prior year. As shown below, excluding special items, net loss from continuing operations was $9.3 million compared to a net loss from continuing operations of $25.9 million in the same quarter of the prior year.
- Diluted loss per share from continuing operations of $0.15 compared to a diluted loss per share from continuing operations of $0.58 in the same quarter of the prior year. As shown below, excluding special items, diluted loss per share from continuing operations was $0.15 compared to a diluted loss per share from continuing operations of $0.43 in the same quarter of the prior year.
- Total book debt of $252.4 million at the end of the second quarter compared to $273.1 million at the end of the prior year second quarter, a decrease of $20.7 million.
- Ended the quarter with $48.2 million in cash on hand compared to $23.6 million at the end of the prior year quarter.
Restaurant development
- The company opened one and closed four Ruby Tuesday restaurants during the quarter. Domestic and international franchisees opened one and closed three Ruby Tuesday restaurants during the quarter.
- Franchisees opened one Lime Fresh restaurant during the quarter.
JJ Buettgen, chairman of the board, president and CEO, commented, “While our same-restaurant sales and guest count growth slowed, our same-restaurant guest count performance was in-line with the Knapp Track industry benchmark. We believe one of the primary drivers of our softer results in the current quarter was the impact of lapping last year’s successful menu and value launch. We also lowered our marketing spend from the prior year as we continued our efforts to make our marketing plans more cost effective. We continued to make progress on the business model by improving restaurant-level margins and reducing selling, general and administrative expense compared to last year. While our brand transformation is a journey, and near-term results may fluctuate, we remain confident in our strategy.”
Fiscal 2015 outlook
As previously disclosed, we are not providing quarterly or annual earnings guidance for fiscal 2015. There are, however, certain items which we would like to highlight, including the following:
Third Quarter Outlook
- Same-Restaurant Sales – Estimated same-restaurant sales for the third quarter to be -2% to +1%.
Annual Outlook
- Same-Restaurant Sales – Estimated same-restaurant sales for the fiscal year to be -1% to +1%. The guidance for the year is revised from prior guidance of +1% to +2%.
- Restaurant-level Operating Margin – Estimated to be 16.0% to 17.0% of restaurant sales compared to 15.1% in fiscal 2014. The improvement is primarily due to decreases in the cost of goods sold, payroll and related costs, and other restaurant operating costs associated with cost savings initiatives.
- Selling, General, and Administrative Expense – Estimated to be $127 to $130 million compared to $137.2 million in fiscal 2014. The reduction is primarily due to $5.3 million in costs incurred in 2014 for corporate restructuring and executive transition costs, and an additional $3.5 million in savings resulting from our 2014 cost reduction initiatives. It is estimated that marketing expense for this fiscal year will be lower than fiscal 2014.
- Restaurant Development – During the year, they plan to open one new company-owned Ruby Tuesday restaurant and expect to close 10 to 13 company-owned Ruby Tuesday restaurants. Domestic franchisees expect to open two Lime Fresh restaurants and close one Ruby Tuesday restaurant. International franchisees expect to open five to eight and close three Ruby Tuesday restaurants.
- Capital Expenditures – Estimated to be $28 to $32 million for the year.
- Excess Real Estate –Expected to generate $8 to $12 million of cash proceeds for the year from the disposition of excess real estate.
To end
It is true that restaurant stocks are booming at this moment, but this company did not live up to the expectations. It is better to stay away from this stock. Investors may consider this company when the situation improves.
(Source: Company's Website)
