Ruby Tuesday, Inc. announced fiscal third quarter 2016 financial results for the period ended March 1, and updated its guidance for fiscal year 2016.
Fiscal Third Quarter 2016 Highlights (13 weeks ended March 1, compared to the 13 weeks ended March 3, 2015):
- Same-restaurant sales decreased 3.1 percent, which included a 140 basis point negative impact due to temporary store closures resulting from severe winter weather, compared to a 0.3 percent decline in the third quarter of the prior fiscal year.
- Total revenue declined 5.1 percent to $271.5 million, which included a net reduction of 20 corporate-owned restaurants.
- Restaurant level margin contracted 10 basis points to 17.1 percent.
JJ Buettgen, chairman of the board, president, and chief executive officer, comments, “Our third quarter was a volatile period affected by weather, softness in the casual dining industry, and increased promotional activity by our peers. Despite this challenging environment, we continue to believe that our key brand initiatives will drive an improvement in guest counts.”
Buettgen continues, “We are encouraged by our early results in attracting and delighting women and young families with our Garden Bar initiative and by the lift we are seeing so far at our remodeled locations. We remain focused on better in-restaurant execution, refining our media and targeting plans, and incorporating what we’ve learned from our Garden Bar and remodel tests into our go forward strategy. This gives us confidence that we can return to same-restaurant sales growth and higher operating profitability. While not yet visible in our results, we believe that we have the right framework in place to attract more women and families and increase visits from our current Ruby Tuesday guest.”
Fiscal Third Quarter 2016 Financial Results
Total revenue was $271.5 million, a decrease from last year of $14.4 million, or 5.1 percent primarily due to a net reduction of 20 corporate-owned restaurants compared to the third quarter last year and a same-restaurant sales decline of 3.1 percent at corporate-owned Ruby Tuesday restaurants.
Third quarter same-restaurant sales decrease of 3.1 percent was driven mainly by traffic declines resulting from temporary store closures due to inclement weather and increased discounting by competitors. Year-over-year guest counts were down 5.9 percent for the quarter while average check rose 2.8 percent.
Restaurant level margin, excluding franchise revenue, decreased to $46.1 million from $48.9 million in the prior fiscal year’s third quarter. As a percentage of corporate-owned restaurant sales, restaurant level margin declined approximately 10 basis points to 17.1 percent from 17.2 percent. The decrease was primarily driven by an increase in cost of goods sold and payroll and related costs, partially offset by a reduction in other restaurant operating costs.
Selling, general, and administrative expenses (SG&A) decreased to $27.4 million from $28.9 million in the prior fiscal year’s third quarter. The decrease in SG&A was primarily due to lower G&A expenses, partially offset by increased marketing spend to support new initiatives.
The company ended the fiscal 2016 third quarter with cash and cash equivalents totaling $52.5 million and book debt of $229.1 million. This compares to cash and cash equivalents totaling $45.3 million and book debt of $231.9 million as of December 1, 2015.
As of March 1, there were 729 Ruby Tuesday restaurants system-wide, of which 649 were corporate-owned, and 16 Lime Fresh Mexican Grills, eight of which were corporate-owned and are in the process of being sold. During the third quarter, six corporate-owned Ruby Tuesday restaurants were closed and two international franchised Ruby Tuesday restaurants were opened.
Ruby Tuesday also announced the resignation of Jill Golder, effective as of April 11, who has decided to take a senior leadership role at another company. Golder had joined the Company in April 2013 as Senior Vice President of Finance and was promoted to Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary in June 2014.
“On behalf of our Board and team members, I would like to thank Jill for her many contributions during her tenure at Ruby Tuesday,” Buettgen says. “Jill has been instrumental in improving our financial positioning and has put in place a strong finance team that will enable us to move ahead with our brand transformation strategy. We wish her the best.”
Golder states, "I am looking forward to my new business opportunity and am proud of what we have accomplished at Ruby Tuesday. I wish everyone at the company success.”
Additionally, Ruby Tuesday announced the appointment of Tom Williams to the position of Chief People Officer, effective April 18. Mr. Williams has more than 30 years of experience in executing and leading human resources functions in both private and public retail organizations. In his role as Chief People Officer, he will be responsible for leading the Human Resources department at Ruby Tuesday.
“Tom not only has significant human resources experience but also a background in leading store operations and supply chain which has provided him with a deep understanding of HR opportunities at a multi-unit operation. He also has helped develop and implement HR programs and policies designed to attract and retain talent across all disciplines which we feel will be a great asset to Ruby Tuesday,” Buettgen says. “We are pleased to welcome Tom to the team at Ruby Tuesday and look forward to the new ideas and fresh perspective he brings to our Human Resources function.”
Most recently, Williams held the position of Chief Human Resources Officer for Jo-Ann Stores, the nation's largest specialty retailer of fabrics and crafts with over 850 stores in 49 states. He also has experience leading store operations and supply chain at Jo-Ann Stores. Prior to that, Williams worked for WalMart in a variety of Human Resources, Finance and operational roles.
Williams adds, “It’s a great feeling to join a team that is dedicated to cultivating a strong corporate culture, leveraging the thoughts and ideas of engaged employees, and ensuring a great place to work. I am excited to join the Ruby Tuesday team and to continue fostering the positive work environment.”