For the second quarter of fiscal year 2005, dilutedearnings per share decreased 30.3% to $0.23.
Moreover, same-store sales at company-owned RubyTuesday restaurants decreased 8.6% as compared to anincrease of 3.9% during the second quarter of theprior year, while same-store sales at Ruby Tuesdayfranchise restaurants decreased 5.1% during thequarter. Same-store sales for September, October andNovember at company-owned restaurants were down 8.9%,8.7% and 8.1%, respectively.
Ruby Tuesday's chairman & CEO Sandy Beall attributesthe poor performance to a change in advertisingstrategy from couponing to television drivenmarketing; economic pressure on the middle incomeconsumer base; and menu portion decisions, which hecalls "a mistake."
Ruby Tuesday is addressing the problems, Beallcontends. For example, the restaurant operator willlaunch a new menu on January 18, 2005 that adjustedthe food portions. And, it has committed to spendingan additional $3 million to $4 million on television advertising that is less focused on brand building and more focused on getting people in the restaurants. He believes these efforts will return Ruby Tuesday's same-store sales to the 2% to 3% growth levels.
The Maryville, TN-based restaurant operator also tooksteps during its second quarter to adjust the way itsaccounts for its rent and sublease expenses. Thischange is similar to what other restaurant operatorshave undertaken. As a result, Ruby Tuesday's secondquarter results include a one-time charge of $7.5million.
Despite the lackluster earnings and sales, RubyTuesday continues to expand. During its secondquarter, 18 company-owned Ruby Tuesday restaurantswere opened and six franchise restaurants were opened.The restaurant operator anticipates openings 55company-owned restaurants during fiscal 2005 andanticipates its franchisees will open 35 Ruby Tuesday restaurants during the same period.
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