MARYVILLE Tenn. Ruby Tuesday Inc., the operator or franchisor of 926 namesake casual-dining restaurants, said fiscal 2007 third-quarter earnings dropped 5 percent from the same period of a year earlier on a lease-related charge from a bankrupt franchisee and reduced sales that the company blamed on severe winter weather.
For the quarter ended March 6, net income totaled $28.7 million, or 49 cents per share, compared with profit of $30.2 million, or 50 cents per share, in the year-earlier quarter. Latest-quarter results included a 6-cents-per-share charge related to the bankruptcy of franchisee Specialty Restaurant Group LLC, the company reported.
Fiscal 2007 third quarter revenue increased 11.6 percent to $377.9 million, aided by the opening of six new corporate restaurants and the acquisition of 11 formerly franchised locations in Florida.
Same-store sales decreased 1 percent at corporate restaurants, but increased 1.8 percent at domestic franchised units, the company reported. Sales results since the end of quarter have trended negative, the company added, and from March 7 through April 3 same-store sales were down about 4.7 percent and 2.6 percent at corporate locations and domestic franchised units, respectively.
Ruby Tuesday said its negative sales were because of difficult comparisons with "very strong same-restaurant sales performance last March" when same-store sales were up 6.3 percent and 10.6 percent at company-owned and domestic franchise restaurants, respectively. In addition, the company said "an even softer economic environment and significant discount pricing by almost all of our competitors" affected sales.
Ruby Tuesday said it expects same-store sales at corporate restaurants to be down between 2 percent and 2.5 percent for the fourth quarter and down 1 percent for the full year. By fiscal year 2008, the company expects same-store sales to return to positive territory, up as much as 2 percent, it said.