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Ruby Tuesday (RT) Beats Earnings Expectations

Ruby Tuesday (RT) beat analyst expectations by $.02 per share today, when it reported earnings per share of $.11 on a net income of $6.1 million for the first quarter of fiscal year 2010. This is compared to earnings of $.01 per share on income of f $285,000 from the same quarter a year ago.

The casual dining restaurant is proving that it can survive the drag of the recession and its effects on consumer discretionary spending, despite several factors working against it.

Ruby Tuesday owns and operates nearly 900 restaurants throughout the United States and selected international locations. The chain has tried to use its budget-conscious image to lure in cost-conscious consumers.

While many chains have waved the white flag in response to the economic downturn, RT’s marketing department has certainly managed to make do with what they have.

Improved guest traffic and same-store sales were two major highlights of the last two quarters, and continued in the most recent one. This is mainly due to Ruby Tuesday putting its advertising dollars into the restaurants themselves, focusing on in-store promotions and an aggressive Internet/newspaper coupon campaign. A restaurant redesign, new menu items and Dinner for Two specials were instituted in the effort. The company should also only benefit from the absence of its bankrupt competition (Bennigans and Steak & Ale) once the economy is back on its feet and consumers’ wallets loosen up.

That’s not to say RT hasn’t felt the heat. For the fiscal year ended June 2, 2009, it reported a diluted loss per share of $.35 on a net loss of $17.9 million.

In response to its formidable debt, RT issued 11.5 million shares of common stock in July. The company managed to raise $73.2 million in net proceeds in the offering, which was used in debt payment. All told, Ruby Tuesday reduced its debt by $107 million in the first quarter.

The turnaround has been slow going for Ruby Tuesday, and investors should not expect any drastic surges. But while the restaurant sector remains in limbo, look for Ruby Tuesday to stay afloat and continue steady gains.

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