This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Ruby Tuesday Gets Squeezed by Competition

Stocks in this article: RT

NEW YORK ( TheStreet) -- Shares of Ruby Tuesday (RT) were reeling Thursday after the casual restaurant operator reported disappointing quarterly results because of flagging same-store sales.

The Maryville, Tenn.-based company cited a tight promotional environment as part of the reason for the weak numbers, saying it hasn't matched the television advertising efforts of its competitors.

In an effort to turn things around, Ruby Tuesday plans to close 25 to 27 underperforming stores in the fourth quarter and increase the coverage of its own television advertising campaign. The company has also inked a deal to acquire Lime Fresh Mexican Grill for $24 million.



The stock was down nearly 17% to $7.41 in afternoon trades on volume of 2.5 million, more than five times the issue's trailing three-month daily average. .

After Wednesday's close, Ruby Tuesday reported earnings of $4.5 million, or 7 cents a share, down from year-earlier earnings of $16 million, or 25 cents a share. Revenue came in at $324.8 million, up slightly from last year's total of $319.1 million. Same-store sales fell 5% at company-owned locations.

The latest quarter includes 11 cents a share in impairment costs related to the planned restaurant closings.

The average estimate of analysts polled by Thomson Reuters was for a profit of 16 cents a share in the February-ended period on revenue of $339 million.

"We believe the steps we have taken this quarter will enable us to positively impact our future sales and profits," CEO Sandy Beall said in a statement. "While we were pleased with our earnings performance given our lower sales levels, we are clearly disappointed in our same-restaurant sales results for the third quarter."

Bank of America Merrill Lynch kept an underperform rating and a $7 price target on Ruby Tuesday in the wake of the news, saying "the recent results raise the risk of a prolonged transition period with little visibility on longer term strategy."

The firm, which was expecting same-store sales to dip just 1% in the quarter, also noted that Ruby Tuesday once again reduced its full-year earnings outlook to a profit of 43 to 48 cents a share, excluding items. Wall Street's current consensus estimate is for a profit of 57 cents a share.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs