Ruby Tuesday (NYSE:RT) is trading slightly lower today at $7.11 a share after the company reported on Wednesday after the market closed that its net income in the first quarter fell by 75 percent. The disappointing earnings performance was a results of increased advertising and promotional costs as well as a highly competitive market.
The company said that for the three month period it earned a total of $3.1 million, or 5 cents per share, down from $12.4 million, or 19 cents per share that it reported during the same quarter last year. That results included a one time gain of $1.7 million, or 2 cents per share in connection with accounting gains realized from franchise partner acquisitions. Analyst on average had expected the company to report earnings of 6 cents per share.
Revenue for the period grew by 9 percent to $3303 million, slightly lower than Wall Streets estimates of $333.9 million. Revenue at restaurants open at least 12 months fell by 4.1 percent. Operation costs and expenses rose by 13.6 percent to $322.7 million.
Ruby Tuesday’s CEO Sandy Beall stated that “We continue to operate in an aggressive competitive promotional environment with very heavy advertising levels and we expect these competitive marketing trends to continue given the soft economy and low consumer confidence”.
For the 2012 fiscal year the company said it expects to see earnings of 60 to 75 cents per share while analysts expect the company will earn 76 cents per share. It is anticipating a loss of between 4 and 8 cents per share in the second quarter.
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