Ruby Tuesday Sales Continue Slide

Ruby Tuesday Inc. reported a much deeper loss in its latest quarter as revenue slid on restaurant closures, and the chain said it would refresh its core menu.

Shares in the company, which have wiped away more than half their value so far this year, fell another 4% after hours to $2.41.

Lane Cardwell, interim chief executive, said while the casual dining environment "remains highly competitive and challenging as evidenced by our negative quarterly same-restaurant sales, our trend improved sequentially during the first quarter as we made investments in highlighting value aimed at building guest counts."

She said the company is focusing on driving traffic through its "Fresh Start" initiatives launching in the coming months, including a redesign of its core menu.

The moves come less than a month after James Buettgen resigned as CEO, following the restaurant operator's announcement it would close about 13% of its locations amid declining sales.

In the most recent quarter, same-restaurant sales slipped 2.7%, hurt by guest traffic declines resulting from a "challenging and competitive external environment," the company said. The chain drew 3.1% fewer customers during the quarter, while the average check edged 0.3% higher.

In all for the quarter ended Aug. 30, the restaurant company posted a loss of $39.7 million, or 66 cents a share, wider than its loss of $4.2 million, or 7 cents a share, a year earlier. Excluding certain items, the company reported earnings of 11 cents, compared with 3 cents a year ago.

Revenue dropped 8.2% to $256.7 million, including a net reduction of 109 company-owned restaurants. In August, Ruby Tuesday said it would shut about 13% of its restaurants as the chain grapples with falling traffic and declining revenue, trends it expects to persist.

The company also said it is discontinuing providing guidance as it works to improve its business. Ms. Cardwell said new products—including the new menu—as well as the relaunch of successful promotions, and the roll out of an enhanced Garden Bar systemwide in January coupled with service improvements "will bring same-restaurant sales back into positive territory in fiscal 2017."

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

October 06, 2016 17:55 ET (21:55 GMT)

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