Ruby Tuesday 2Q Same-Store Sales Down :: Restaurant Supply Resource

Ruby Tuesday 2Q Same-Store Sales Down

Ruby Tuesday, Inc. Announces Second Quarter Fiscal 2005 Same-Store Sales and Estimated Diluted Earnings Per Share

Ruby Tuesday, Inc. (NYSE: RI) announced that second quarter fiscal 2005 same-store sales at Company-owned Ruby Tuesday restaurants decreased 8.6%, while same-store sales at domestic franchise Ruby Tuesday restaurants decreased 5.1%. As a result, the Company now estimates diluted earnings per share for its second quarter will be $0.30. Based on the environment and the Company's various initiatives, the Company did not re-iterate previously issued guidance or re-issue guidance for the balance of fiscal 2005.

Sandy Beall, the Company's Chairman and CEO commented, "Our same-store sales for September, October and November at Company-owned restaurants were down 8.9%, 8.7% and 8.1%, respectively. We believe that, in addition to general economic conditions, the soft sales performance is being driven by decisions made in conjunction with our Spring menu and our lack of advertising and promotional presence as compared to our competition. We estimate that 4.0-6.0% of the same-store sales decline for the quarter resulted from less couponing.

With regard to our menu, research indicates we are at least at parity with our primary competitors in terms of key attributes. Despite this, we believe we had an issue with some portion sizes and value resulting from decisions we made in conjunction with our menu released last Spring. However, we corrected these with our August menu and by increasing additional portions this Fall. We will introduce our Winter menu January 18th, which we believe has the best portions and value, as well as the most unique items, that we have ever had.

The other factor we believe is contributing to our softer sales is our lack of material advertising and/or promotional presence. We know we have dramatically negatively affected same-store sales by greatly reducing our only form of promotion (coupons) as we transition to media advertising like our competition. After ninety days of our brand building television advertising, we have seen solid increases in brand awareness. As we go forward, our advertising will transition into being more food based and deliver more of a call to action. Advertising will play an increased role in driving same-store sales, especially during times like these when we believe there are fewer customers in our category being chased by increased advertising dollars and promotional messages."

"We are disappointed with our same-store sales performance, but we have a solid management team with high morale and low turnover. We are focused on and investing in our food through increased value and portions and increasing advertising to return to positive same-store sales growth. In our case, it is a sales challenge, thus we remain focused on doing everything we can do to drive same-store sales."

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Date Listed: 2004-12-09

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Industry: Restaurants
Category: Financial
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