Restaurant chain Ruby Tuesday, Inc. (RT) Wednesday said its profit for the first quarter increased from last year, and came in above estimates, on lower expenses. Revenues, however, dropped reflecting weak sales both at same-restaurant, and company-owned and domestic franchise Ruby Tuesday restaurants. Notwithstanding the decline, revenues came in above estimates. Looking ahead, Ruby revised it full-year 2010 earnings forecast, raising the upper end of its earnings forecast from its previous guidance.
For the first quarter, net income of the company rose to $6.14 million or $0.11 per share from $0.29 million or $0.01 per share in the same quarter a year ago.
On average, eight analysts polled by Thomson Reuters expected earnings of $0.09 per share for the quarter. Analysts' estimate typically excludes one-time items.
Revenue for the quarter dropped to $300.61 million from $324.00 million in the same quarter a year ago. Revenues, however, came in ahead of Street estimates of $296.89 million for the quarter.
Restaurant sales and operating revenue decreased to $299.30 million from $321.22 million, while Franchise revenue dropped to $1.31 million from $2.79 million in the year-earlier quarter.
Same-restaurant sales for quarter decreased 3.1% and 6.5% at company-owned and domestic franchise Ruby Tuesday restaurants, respectively, when compared to the prior-year quarter. Guest traffic at company-owned same-restaurants was up in the quarter.
Sequentially, the company reported a 3.7% increase in fourth quarter profit, helped by lower operating costs and expenses, offsetting a 7.1% decline in quarterly revenues.
Total operating costs and expenses were down at $287.78 million, compared to $313.84 million in the prior-year quarter.
Commenting on the results, Sandy Beall, Founder and CEO said, "Although the environment remains challenging, we are pleased that the momentum we established in the second half of fiscal 2009 through our marketing strategies and cost savings initiatives continued in the first quarter."
The company said it paid down $107.0 million of debt, boosted by net proceeds of approximately $73 million from equity offering in July to debt retirement.
Looking ahead to the fiscal year 2010, Ruby Tuesday said it now expects earnings in the range of $0.50 to $0.60 per share and same-restaurant sales for company-owned restaurants in the range of down 1% to down 3%. Previous earnings forecast was in the range of $0.50 to $0.65 per share, and same-restaurant sales of down 2.5% to 3.5%. The Street currently expects earnings of $0.57 per share for the quarter.
Ruby Tuesday also indicated that no new company-owned Ruby Tuesday restaurants will be opened in fiscal 2010, while it intends to close around 15, as part of previously announced plan to close 30 restaurants over time when their leases expire. The company, however, projects its franchisees to open 6 restaurants, 3 of which will be international.
RT closed Wednesday's regular trading at $7.91, on a volume of 2.16 million shares. In after-hours, the stock dropped $0.19 or 2.40%, to trade at $7.90.
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