Restaurants chain operator Ruby Tuesday, Inc. (RT), Tuesday said its third quarter profit dropped sharply from the prior year, hurt by lower revenues and lack of benefits. Results also reflect the effect of substantial charges related to closures and impairment announced earlier. Same-store sales also declined from the prior-year quarter. Adjusted earnings and revenues, however, came in above Street estimates. Ruby Tuesday revised its loss forecast for fiscal year 2009 from its previously provided range, while expecting economic volatility to persist.

Ruby's net income more than halved to $4.77 million or $0.09 per share from $11.71 million or $0.23 per share in the comparable quarter last year.

Results for the quarter included an income tax provision of $0.27 million, compared to a benefit of $2.31 million recorded in the year-earlier quarter. Results also reflect closures and impairment of $14.59 million pre-tax announced previously in December 2008, which reduced earnings per share by $0.17.

Adjusted profit for the quarter was $0.26 per share, less charges pertaining to restaurant closures and impairment expenses.

On average, seven analysts polled by Thomson Reuters expected earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenue for the quarter decreased 9.6% to $317.5 million from $351.23 million in the same quarter a year ago, however, above Street estimates of $311.07 million. The decline reflects a 6.8% decline in same-restaurant sales and 50 fewer restaurants in operation than in the prior year.

In the sequentially preceding second quarter, Ruby Tuesday reported a loss that widened to $37.42 million or $0.73 per share as revenues declined 9.7% to $289.78 million from the prior-year quarter.

Among others in the industry, DineEquity, Inc. (DIN), operator of Applebee's Neighborhood Grill & Bar and IHOP brands, reported a wider loss for the fourth quarter of $136.9 million or $8.15 per share, hurt by charges. Quarterly revenues jumped to $355.53 million from $213.6 million in the comparable period last year.

Same-restaurant sales for the quarter under review at company-owned Ruby Tuesday restaurants decreased 6.8%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants were down 5.1%, compared to declines of 12.7% and 12.0% at company-owned and domestic franchise Ruby Tuesday restaurants, respectively, in the prior-year quarter.

The company said it paid down nearly $40 million of debt, bringing year-to-date total to just over $80 million.

For the nine-month period, net loss was $32.36 million or $0.63 per share, compared to a profit of $12.45 million or $0.24 per share in the year-ago period. Revenue for the period dropped to $931.30 million from $1.02 billion in the year-earlier period.

Ruby Tuesday said it now expects full-year 2009 loss in the range of $0.40-0.50 per share, compared to the prior guidance range expecting a loss of $0.45-0.55 per share. The Street currently expects earnings of $0.28 per share for the year.

The forecast includes impact of closures and impairments and Goodwill charges in the second and third quarters totaled $0.88 per share.

Same-restaurant sales are expected to decline 8% to 9% for the year, compared with prior guidance of a 9% to 10% decline, which assumes some further improvement during the fourth quarter.

Originally, the company anticipated reporting a profit in the range of $0.30 to $0.35 per share for 2009, and same-restaurant sales to decline at a mid-single digit rate.

Sandy Beall, founder and chief executive officer said, While the near-term economic environment is expected to remain under pressure, we are doing everything we can to finish our fiscal year with strength and carry the momentum we gained in the third quarter over to our next fiscal year.

On January 8, 2009, brokerage Credit Suisse said, To reflect a lower comp outlook, but aggressive cost cutting and the tax benefit from FQ2, our F09 EPS est. increases to $0.30 from $0.24. Our F10 EPS est. rises to $0.60.

Brokerage Sun Trust Rbsn Humphrey, on January 8, 2009, downgraded Ruby Tuesday to 'Neutral' from 'Buy', with a mean target range of 1.62.

RT closed Tuesday's regular trading at $3.89, down $0.15 or 3.71%, on a volume of 0.84 million shares. In after-hours trading, the stock gained $0.56 or 14.40%, to trade at $4.45. In the last 52-week period, the stock traded in the range of $0.85 to $9.25, on a three-month average volume of 0.52 million shares.

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