Casual dining chain Ruby Tuesday (RT) is facing stiff competition from peers like Chipotle Mexican Grill (CMG). However, the company started financial year 2015 on a high note. It posted impressive first-quarter financial results. This improved performance was driven by strong comp sales coupled with rebranding efforts and enhanced restaurant-level margins. Ruby Tuesday has outpaced the industry on both the matrices such as same-store sales and same restaurant guest count for three consecutive quarters now. In addition, the company is effectively executing its brand transformation pains that should reap handy fruits for the company in the long run.
Results and beyond
The Maryville, Tennessee-based restaurant chain reported net sales of $281.2 million a slump of almost 3% as compared to net sales of $289.67 million in the same quarter a year earlier. The slowdown in the net sales was due to closure of its 38 underperforming restaurants. Yet its sales were pretty close to analysts’ estimates of $282.9 million in sales for the quarter.
However, it made tremendous progress in its bottom line. Its net profit rose to $2.6 million or earnings of $(0.01) per share from a loss of $21.9 million or earnings of $(0.36) per share in the same period last year. This also outperformed the average analysts’ estimates of $(0.12) per share for the quarter.
— Guru Focus