MARYVILLE Tenn. Ruby Tuesday Inc., operator or franchisor of 942 casual-dining restaurants, posted a 59-percent plunge in its third-quarter net income as declines in sales and guest traffic continued to challenge the struggling chain.
For the 13 weeks ended March 4, net income slipped to $11.7 million, or 23 cents per share, from $28.7 million, or 49 cents per share, in the year-earlier quarter.
Revenue fell 7.1 percent in the latest quarter to $351.2 million. Same-store sales fell 12.7 percent at corporate Ruby Tuesday restaurants and fell 12.0 percent at domestic franchised locations, the company reported.
“It has been a very challenging year for consumers who have reduced spending in many areas, including eating at restaurants, and we have certainly felt the impact of that lower spending,” Sandy Beall, chief executive, said in a statement.
The company booked expenses of 6 cents per share for the rebranding initiative that Ruby Tuesday has undertaken for about a year. The program includes building renovations, menu modifications, and marketing and advertising changes geared to create a more upscale image of the concept. The company has completed remodels at more than 600 of its 721 corporate locations.
Despite the weak financial results, Ruby Tuesday said it was confident that the latest quarter was “a turning point” for the chain, especially in efforts to build its check average and to manage costs.
“Our focus is firmly on sales, profitability and cash flow as we move forward,” Beall said, “and based on the significant improvement in all our qualitative measures, sales should inevitably follow.”
For the full fiscal year, which ends in May, Ruby Tuesday said it expected same-store sales to drop between 9 percent and 10 percent at corporate locations. It expects to earn between 40 cents and 50 cents per share, including annual expenses of as much as 20 cents per share for the remodeling program. A year earlier, Ruby Tuesday earned $1.66 per share.