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Ruby Tuesday investors like the sound of a sale

Tuesday, March 14, 2017 7:17
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(Before It's News)

Shares in Ruby Tuesday Inc (NYSE:RT) boomed on Tuesday after the restaurant chain said it was considering putting itself up for sale.

The Tennessee-based group said it was exploring “strategic alternatives”, including a sale or merger, as it looks to “position the business for long-term success”.

Ruby Tuesday is just one of a number of companies that have struggled as the decline of the casual dining industry shows no sign of easing.

Alongside the announcement, the company revealed that like-for-like sales fell 4% for the year to February 28 2017, while revenue also fell 17% year-on-year to US$225.7mln.

The stock has been on a downward trend for five years now and, like several of its competitors, has suffered from reduced foot fall and sales as fewer people dine out.

The unfortunate combination of lower food costs and higher staff expenses is making it difficult for firms like Ruby Tuesday to compete with supermarkets and the eat-at-home option.

In the fourth quarter of 2016, sales at chain restaurants open for at least 18 months dropped 2.4%, the worst quarterly performance for years.

In December alone, a key quarter for the retail and food industries, sales plunged 4.3%; the poorest monthly showing since 2013.

Investors were clearly in favour in one form of restructuring or another, with shares up 18% to US$2.04 in early deals on Tuesday.

Story by ProactiveInvestors


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