Worth Watching Stocks – Ruby Tuesday, Inc. (NYSE:RT)
On Thursday, Shares of Ruby Tuesday, Inc. (NYSE:RT) gained 6.87% to $2.80. Trading volume recorded for this company was about 1.05M shares as contrast to its average volume of 1.12M shares. The stock’s intraday range was $2.60 to $2.84. The company has the total of 60.57M outstanding shares, while its market capitalization is about $168.32M.
Ruby Tuesday, Inc. (RT) recently declared financial results for the fiscal quarter ended February 28, 2017.
Fiscal Third Quarter 2017 Financial Results:
Total revenue was $225.70M, a decrease of 16.8% or $45.70M from the third quarter of the prior fiscal year. This decrease was because of a net reduction of 105 Company-owned Ruby Tuesday restaurants as contrast to the third quarter of the prior fiscal year and a same-restaurant sales decline of 4.0% at Company-owned Ruby Tuesday restaurants.
The third quarter same-restaurant sales decrease was driven in part by guest traffic declines resulting from a challenging external environment, with year-over-year guest counts down 3.80%. Moreover, average net check declined 0.20% because of menu mix shift in addition to promotional activity during the quarter.
Restaurant level margin reduced to $35.40M from $46.10M in the third quarter of the prior fiscal year. As a percentage of restaurant sales and operating revenue, restaurant level margin declined 130 basis points to 15.80% driven mainly by increases in cost of goods sold and payroll and related costs.
General and administrative expenses (G&A) reduced to $13.90M from $14.10M in the third quarter of the prior fiscal year. As a percentage of total revenue, G&A expenses raised 90 basis points to 6.10% from 5.20%. G&A in the third quarter of the prior fiscal year included a $500,000 favorable true up in incentive compensation.
Marketing expenses rose to $13.80M from $13.20M in the third quarter of the prior fiscal year. As a percentage of revenue, marketing expenses, net raised 120 basis points to 6.10% from 4.90%. The increase in marketing expenses as a percentage of total revenue was mainly because of deleveraging on lower sales.
Net Loss was $19.8 million, or ($0.33) per diluted share, contrast to Net Loss of $3.10M, or ($0.05) per diluted share, in the third quarter of the prior fiscal year.
Adjusted Net Loss was $3.80M, or ($0.06) per diluted share, contrast to Adjusted Net Income of $1.60M, or $0.03 per diluted share, in the third quarter of the prior fiscal year. Adjusted Net Loss for the third quarter of fiscal year 2017 excluded adjustments of $16.0M, mainly related to closures and impairment charges. Adjusted Net Income in the third quarter of fiscal year 2016 excluded adjustments of $4.70M, mainly related to closures and impairment charges.
Lane Cardwell, former Interim President and Chief Executive Officer, commented, “The casual dining environment remains highly challenging, promotional, in addition to price competitive and our sales trends are reflective of these conditions. Still, we are optimistic by the sequential progress we showed during our third quarter relative to the industry. In particular, we narrowed our performance gap with respect to same-restaurant sales and average check and have now outperformed in guest counts for three successive quarters. More importantly, we are encouraged by recent trends and expect further sequential improvement in operating performance in addition to same-restaurant sales in the fourth quarter.”
Cardwell concluded, “We are building momentum through the hard work and dedication of our whole team who are executing the key strategies of our Fresh Start programs. We effectively rolled out our improved New Garden Bar nationwide across Ruby Tuesday locations in January, the biggest change we’ve made to our brand in the last decade, as a follow-up to our new core menu launched last November. We will continue to fine tune and evolve both our New Menu and New Garden Bar to value engineer our offering and showcase the everyday affordability Ruby Tuesday offers. We firmly believe our improved Garden Bar is our greatest brand differentiator because it appeals to customers seeking fresh, healthy options. Initial guest feedback validates these improvements but it will take time to drive greater frequency with our existing guests in addition to attract new guests.”
Balance Sheet:
On January 31, 2017, Ruby Tuesday reached a seventh amendment and waiver with its lenders regarding its Senior Credit Facility agreement. Among other things, the Seventh Amendment and Waiver amends the termination date from December 3, 2017 to June 2, 2017, increases the flexibility of the financial covenants under the Senior Credit Facility for the fiscal quarter ending February 28, 2017, restricts the ability of the Company to make certain acquisitions, dispositions, investments, capital expenditures and guarantees of indebtedness, and reduces the amount Ruby Tuesday may borrow under the Senior Credit Facility from $50.0M (counting $25.0M sublimit for standby letters of credit), to $30.0M (counting $15.0M sublimit for standby letters of credit).
As of February 28, 2017, the Company was in compliance with the financial covenants of its Senior Credit Facility and is evaluating options to replace the current facility.
Aside from the $11.10M letters of credit outstanding as of February 28, 2017, Ruby Tuesday had no borrowings under the Senior Credit Facility.
The Company also received cash proceeds of $9.60M related to the sale of seven properties during the quarter at an average per unit of $1.40M.
In addition, Ruby Tuesday paid down $9.60M in mortgage debt during the quarter. The Company ended the fiscal 2017 third quarter with cash and cash equivalents totaling $32.60M and debt of $213.90M.
Restaurant Activity:
As of February 28, 2017, there were 607 Ruby Tuesday restaurants system-wide, of which 544 were Company-owned. During the third quarter, two Company-owned Ruby Tuesday restaurants were closed. Moreover, one international franchised Ruby Tuesday restaurant was opened and one domestic franchised and four international franchised Ruby Tuesday restaurants were closed during the quarter.
Technical Analysis:
The stock price is going up to its 52-week low with +65.68% and lower from its 52-week high with -48.05%. The stock has shown its weekly performance of -0.36% and monthly performance stands at 54.70%. The stock price is moving down from its 200 days moving average with -3.21% and upward from 50 days moving average with 32.24%.
Analyst recommendation for this stock stands at RT.