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Ruby Tuesday posts traffic gains in 2Q

MARYVILLE Tenn. Ruby Tuesday Inc., parent of the 672-unit casual-dining chain, reported this week that it swung to a profit in its latest quarter from a year-ago loss with help from better sales and traffic trends.

The improved performance, according to the company, is a result of Ruby Tuesday’s brand reimaging, which includes new menu items, a new restaurant design, revamped bar areas and a focus on service. The chain's repositioned branding effort began in 2007 and was completed about a year ago, and for its latest quarter, it may be paying dividends.

For the three months ended Dec. 1, the chain was able to boast an increase of 1.8 percent in year-over-year guest traffic, its third consecutive quarter of positive guest trends. Same-store sales remained negative, down 1.7 percent at corporate locations and down 4.7 percent at franchised units.

“The increase in our traffic indicates that our brand repositioning is being recognized and appreciated and our research says the same thing — brand repositioning of the new Ruby Tuesday is good,” Sandy Beall, Ruby Tuesday's founder and chief executive, said in a conference call with investors Wednesday.

Analysts said sustaining the positive drive may become more difficult with the severe winter weather experienced in recent months, and tougher comparisons to year-earlier results in the next few quarters. Still, many remained positive about the steps toward recovery Ruby Tuesday is making.

“We believe management is effectively executing a marketing plan of introducing new food products supported by incentive offers designed to drive dinner item and beverage usage, which should boost profit margin,” Chris O’Cull, a SunTrust Robinson Humphrey senior restaurant analyst, said in a report Thursday.

Ruby Tuesday earned $400,000, or 1 cent per share, for the second quarter ended Dec. 1, compared with a net loss of $37.4 million, or 73 cents per share, for the same quarter a year ago. The year-ago quarter included charges of $56.1 million, or 71 cents per share, for the restructuring of the company’s property portfolio and the write-off of its goodwill.

Revenue for the second quarter fell 5.6 percent to $273.5 million, mainly because of the closures of 43 restaurants and a decrease in same-store sales.

Contact Elissa Elan at [email protected].

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