Ruby Tuesday to Shut 95 Restaurants as Sales Slide

Ruby Tuesday Inc. 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 Tennessee-based restaurant operator said it would close about 95 underperforming locations next month. Ruby Tuesday counted 724 restaurants in its system as of the end of May, with most of them owned by the company.

The closures comes as Ruby Tuesday said sales dropped in its latest quarter, which ended in May, reversing improvement reported in recent periods. Sales at locations open at least a year fell 3.7%, worse than the 1.7% decline in the year-ago quarter and down from a 3.1% bounce in the previous three months. Traffic dropped 4.6%, the company said.

"Our fourth quarter was impacted by softness in the casual dining industry and increased promotional activity by our peers," said Chief Executive JJ Buettgen. "Given that we expect the macro environment to remain challenging for some time, we are taking the necessary steps to change the trajectory of our business," he said, adding that employees affected by the decision "will be offered positions in nearby restaurants where possible."

A spokeswoman didn't immediately return a request for comment on the number of jobs affected.

Ruby Tuesday isn't alone in closing stores amid dropping sales and lower foot traffic. Retail giant Macy's Inc. said earlier Thursday that it would close 100 locations, about 15% of its store base that represents about 4% of revenue. For retailers, dwindling traffic is largely the result of shoppers' shift to online options like Amazon.com, and restaurant chains like Ruby Tuesday—often found in malls—are feeling the pinch.

Mr. Buettgen said the closures are part of a broader initiative to prop up profit and reignite sales. Other measures include a revamped menu and improved salad bar, which the company had previously announced.

In all for the quarter, Ruby Tuesday reported a loss of $27.6 million, or 46 cents a share, down from a year-earlier profit of $4.3 million, or 7 cents a share. Excluding restructuring costs, asset-impairment charges and other items, the company reported a profit of 10 cents a share, flat from the year-earlier period.

Revenue slid 5.9% to $279.3 million.

Analysts projected a profit of 11 cents a share on $285.0 million in sales, according to Thomson Reuters.

For the newly-started fiscal year, the company expects to earn 5 cents to 9 cents in adjusted earnings per share, with an extra week boosting per-share profit by 2 cents. Analysts have been looking for 13 cents for the full year.

While the company said it expects business to remain tough for some time, it suggested sales would improve over the course of the year, projecting same-restaurant sales that are flat to up 2%.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

August 11, 2016 18:15 ET (22:15 GMT)

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