Ruby Tuesday to close stores and sell chain
MARYVILLE, Tenn. (AP) — Ruby Tuesday Inc. posted a fiscal second-quarter loss Wednesday and said it plans to close up to 24 locations and sell one of its restaurant chains.
The company, based in Maryville, Tenn., has struggled for some time with the impact of the tough economy and intense competition on its financial performance. It said the move is necessary so it can focus on its remaining Ruby Tuesday and Lime Fresh chains. At the end of the quarter, the company owned or franchised 786 Ruby Tuesday restaurants and 22 Lime Fresh locations.
Its shares fell more than 8 percent in after-hours trading.
Ruby Tuesday said Wednesday that it will close 13 Marlin & Ray's restaurants immediately. It also will close one Wok Hay restaurant and is seeking a buyer for its two licensed Truffles Grill restaurants. It also plans to close two of its company-owned Lime Fresh restaurants and six to eight company-owned Ruby Tuesday restaurants.
The company expects to record a $16.9 million pre-tax charge in its second-quarter tied to the closings and incur $2 million to $5 million in other charges in its third quarter.
The moves comes shortly after the company appointed JJ Buettgen as President and CEO. The former Darden Restaurants Inc. executive took over Dec. 1 following the departure of the company's founder and longtime CEO Sandy Beall, who resigned in June.
Ruby Tuesday closed 29 of its company-owned namesake restaurants in the past year. That helped push down quarterly revenue to $304.2 million from $307.4 million last year.
The company posted a net loss of $15.1 million, or 24 cents per share, for the quarter that ended Dec. 4. That compares with a loss of $2 million, or 3 cents per share, in the same quarter last year. Excluding one-time items, Ruby Tuesday lost 7 cents per share.
Analysts polled by FactSet expected a loss of 6 cents per share on revenue of $305 million.
Revenue from company-owned Ruby Tuesday restaurants open at least a year increased 0.3 percent for the period. That is considered a key indicator of financial performance, since it strips away the impact of recently opened or closed stores.
Ruby Tuesday expects to earn 24 to 30 cents per share for its 2013 fiscal year on an adjusted basis. Analysts forecast 29 cents per share.
The company's board increased its share buyback authorization by 10 million shares for a total 12.7 million shares approved for repurchase.
Ruby Tuesday shares fell 71 cents, or 8.5 percent, to $7.60 in after-hours trading. It fell 5 cents to close at $8.31 in the regular session. The stock has traded between $4.98 and $9.39 in the past 52 weeks.