Ruby Tuesday, Inc. (RT) Tops Q3 EPS by 3c, Offers FY15 Outlook

(Updated - April 9, 2015 4:11 PM EDT)

Ruby Tuesday, Inc. (NYSE: RT) reported Q3 EPS of ($0.01), $0.03 better than the analyst estimate of ($0.04). Revenue for the quarter came in at $285.9 million versus the consensus estimate of $286.36 million.

This decrease versus the same quarter of the prior year reflects the closing of 22 restaurants and a same-restaurant sales decline of 0.3% at Company-owned Ruby Tuesday restaurants. Same-restaurant guest counts at Company-owned Ruby Tuesday restaurants were down 1.0% compared to the same quarter of the prior year.

Fiscal 2015 Outlook

As previously disclosed, we are not providing quarterly or annual earnings guidance for fiscal 2015. There are, however, certain items which we would like to highlight, including the following:

• Same-Restaurant Sales – We estimate same-restaurant sales for the fourth quarter to be flat to down low single digits. We estimate same-restaurant sales for the fiscal year to be flat to -1.0%. The guidance for the year is revised from prior guidance of +1 to -1%.
• Restaurant Level Margin – Estimated to be 16.5% to 17.0% of restaurant sales compared to 15.1% in fiscal 2014. This annual guidance is updated from prior guidance of 16.0% to 17.0%. The improvement is primarily due to decreases in cost of goods sold, payroll and related costs, and other restaurant operating costs resulting from cost savings initiatives.
• Selling, General, and Administrative Expense – Estimated to be $117 to $119 million compared to $137.2 million in fiscal 2014. The guidance for fiscal year 2015 is revised from prior guidance of $127 to $130 million. The reduction versus fiscal 2014 is primarily driven by reduced marketing spending.
• Restaurant Development – Our restaurant development plans for the fiscal year are largely complete. Year to date, we have opened one new Company-owned Ruby Tuesday restaurant and have closed 11 Company-owned Ruby Tuesday restaurants. We have closed one Company-owned Lime Fresh restaurant during the year. Domestic franchisees have opened two Lime Fresh restaurants and closed both one Ruby Tuesday restaurant and one Lime Fresh restaurant. Year to date, international franchisees have opened six and closed five Ruby Tuesday restaurants and expect to open one Ruby Tuesday restaurant in our fiscal fourth quarter.
• Tax – We are limited as to the amount of tax credits we can use each year based upon our taxable income for that year and cannot recognize a full benefit of any year’s currently generated tax credits or our tax credit carryforwards due to our deferred tax valuation allowance, which will remain until we generate sufficient levels of pre-tax income in the future.
• Capital Expenditures – Estimated to be $28 to $32 million for the year.
• Excess Real Estate – We expect to generate $9 to $11 million of cash proceeds for the year from the disposition of excess real estate. The guidance for fiscal year 2015 is revised from prior guidance of $8 to $12 million.

For earnings history and earnings-related data on Ruby Tuesday, Inc. (RT) click here.

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