Ruby Tuesday Inc. shares sank 10.2% in Thursday after-hours trading after the restaurant chain reported quarterly losses and said it would close about 95 underperforming restaurants by next month.
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“The decision to close restaurants is a hard but necessary step as we take aggressive actions to strengthen our organization”, J.J. Buettgen, Ruby Tuesday’s CEO, said in a statement.
The casual dining chain, which sold its Lime Fresh Mexican Grill brand in June, said the stores will cease operations by September and it expected to incur related pre-tax charges of $72 million to $81 million. Ruby Tuesday counted 724 restaurants in its system as of the end of May, with a lot of them owned by the company.
The closures are a “difficult but necessary step” for the company, as it takes “aggressive action” to strengthen the company, according to J.J. Buettgen, Ruby Tuesday’s president, CEO and chairman of the board.
Same-restaurant sales declined 3.7 percent following a 1.7 percnet decline in the fourth quarter of the prior fiscal year.
Ruby Tuesday saw FY17 EPS at $0.05-$0.09 vs. estimates of $0.07. (RT) on Thursday reported a fiscal fourth-quarter loss of $27.6 million, after reporting a profit in the same period a year earlier.
He said the so-called “Fresh Start” initiative would include improvement in food and beverage offerings, dining environment, service and use of media.
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As of May 31, 2016, the company had cash on hand of $67.3 million. Revenue totaled $279.3 million, down from $296.8 million past year and below the $285 million FactSet consensus. Year-over-year guest counts fell 4.6 percent while average check rose 0.9 percent.
