NEW YORK (TheStreet) -- Ruby Tuesday (RT) was plummeting 7.9% to $5.50 in afternoon trading after news broke of a management reshuffle. The restaurant chain filed an SEC report confirming Chairman Matthew Drapkin's resignation and the promotion of CEO and President James Buettgen to the chairmanship.
Drapkin has held the seat since activist investment fund Becker Drapkin Management, a firm he co-founded, purchased a 2.4% stake in the company in November last year. In a separate filing, Drapkin disposed of his 1.45 million units of common stock.
The Tennessee-based business also announced its appointment of Saks CEO Stephen Sadove as lead director. Sadove, who also sits on the J.C. Penney (JCP) board, will step down from Saks after its takeover by Hudson Bay Co. has been completed.
Ruby Tuesday has suffered from waning sales as it is buffeted by weak consumer spending. In the first quarter ended Sept. 3, the casual-dining chain reported same-store sales fell 11.4% at company-owned restaurants and 8.4% at franchises year on year. The company forecasts single-digit decreases for same-store sales in the second quarter, with an improvement likely in the third and fourth quarter of FY2014.
TheStreet Ratings team rates Ruby Tuesday as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate Ruby Tuesday (RT) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow."