MARYVILLE Tenn. Acknowledging that it “underestimated the impact” of gas prices, higher interest rates and heightened discounting by other casual-dining chains, Ruby Tuesday Inc. reported a 4.8-percent drop in same-store sales at domestic corporate locations for its fiscal 2008 first quarter ended Sept. 4. Same-store sales at domestic franchised locations fell by 2.9 percent for the quarter, the company also reported.
The negative sales led the company to estimate a first-quarter, per-share profit of 21 cents, down 43.2 percent from the company’s year-earlier profit of 37 cents per share, which was aided by a same-store sales dip of just 0.5 percent at corporate restaurants and a same-store sales increase of 1.4 percent at franchised locations.
“We underestimated the impact of continued high gas prices, higher interest rates, and competitive value promotion,” Sandy Beall, Ruby Tuesday founder and chief executive, said in a statement. “These difficulties are felt at all income levels, but especially in middle-income America — our and bar and grill’s core customer base.”
The news drove Ruby Tuesday shares down to a new annual low of $18.40 per share during trading on Tuesday.
The company, which operates 680 namesake restaurants and franchises an additional 253 units, said it has adjusted its “promotion, value, and advertising equation” for the rest of the year.
Ruby Tuesday also said it planned to remodel more than 400 restaurants by December. The newer units tend to outperform other restaurants in both customer satisfaction and sales, Ruby Tuesday said, although it did not reveal by how much. The company’s estimated per-share earnings for the first quarter include 5 cents per share in costs from its remodel initiative.