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Ruby Tuesday, Inc. Reports First Quarter Diluted Earnings Per Share of $0.34; Announces Positive September Same-Store Sales Growth

10/05/2005

MARYVILLE, Tenn.--(BUSINESS WIRE)--Oct. 5, 2005--Ruby Tuesday, Inc. (NYSE:RI) today reported net income of $21.6 million, or $0.34 per diluted share, for the Company's first quarter of fiscal 2006 ended August 30, 2005. This compares to net income of $29.1 million, or $0.44 per diluted share, for the first quarter of the prior year.

Same-store sales at Company-owned Ruby Tuesday restaurants, which improved throughout the quarter and were in-line with the Company's previous guidance of down approximately 4.0%, decreased 3.9% for the quarter. Same-store sales at domestic franchise Ruby Tuesday restaurants decreased 6.4% during the quarter, which was better than the Company had anticipated.


First quarter fiscal 2006 monthly same-store sales:

                        June period  July period August period Quarter
Company-owned              -4.7%        -3.9%         -2.8%     -3.9%
Domestic Franchise         -7.5%        -5.5%         -6.0%     -6.4%

The first quarter of fiscal 2006 marked the Company's final quarter of overlapping heavy, prior couponing efforts as the Company recorded $8.0 million in redemptions during the first quarter of the prior fiscal year. The Company estimates the negative impact on current year first quarter same-store sales results from overlapping prior couponing efforts was 5.0-6.0%.

For the Company's five week September period, which ended on October 4, 2005, Same-store sales at Company-owned Ruby Tuesday restaurants increased approximately 0.5%. The Company notes that same-store sales were down 5.0-6.0% for the first week of the period and up approximately 1.0% for the second week. For the third and fourth weeks of the period, same-store sales increased approximately 2.5% and 3.5%, respectively. And, despite being softer for the first part of the fifth week of the period, same-store sales returned to the previous positive 3.0-4.0% range during the last part of the week and ended the week up approximately 1.5%. The Company believes the softer same-store sales during the first part of the fifth week resulted from last week's spike in gas prices in certain parts of the country. During the Company's September period, same-store sales at domestic franchise Ruby Tuesday restaurants decreased 2.0-2.5%.

    Other highlights for the first quarter include:

    --  Total operating revenue increased 15.2% over the same period
        of the prior year.

    --  The Company opened 16 new Ruby Tuesday restaurants during the
        quarter and closed five. Two restaurants were closed due to
        hurricane destruction, two others were closed due to lease
        expirations and one was sold to an independent third party.

    --  Franchisees opened nine new Ruby Tuesday restaurants during
        the quarter, and two were closed due to lease expirations.

    --  Sales at franchise Ruby Tuesday restaurants (which is the
        basis for determining royalty fees included in franchise
        income on the Company's income statement) totaled $95,903,000
        and $123,837,000 for the first quarter of fiscal 2006 and
        2005, respectively. The Company reminds investors that 44
        restaurants were acquired by the Company from franchisees
        subsequent to the first quarter of the prior year.

    --  Total annualized management turnover (including management
        trainees) remained low for the quarter at 22%.

    --  The Company repurchased 400,000 shares of its common stock
        during the first quarter.

    --  The Company began national cable advertising affecting all
        Company-owned and domestically franchised Ruby Tuesday
        restaurants in June in addition to the previous local network
        advertising affecting approximately 60% of the Company-owned
        locations.

    --  As of the end of the quarter, the Company completed its
        transition from a coupon based marketing strategy to the
        utilization of media advertising.

Sandy Beall, Chairman and CEO commented, "For the first quarter, we saw steady improvement in monthly same-store sales, turnover remained low and we saw continued improvements in operations, our menu and our advertising efforts. In continuing our menu differentiation strategy, we have recently rolled out a new menu with an increased focus on burgers and famous and favorites; including our salad bar, appetizer selection, seafood dishes and ribs. In addition, we now have our kitchen display system in over half of our restaurants and are very pleased with the results we are seeing from an operational, team and guest perspective. Our media advertising efforts continue building momentum and now include national cable, covering all domestic markets as well as local spot network for most Company markets. We were pleased to see that, despite being down 5.0-6.0% in same-store sales for the first week of September with the hurricane impact and consumer fears, sales did improve during the month and were positive for all of the following weeks. We are particularly pleased with the fact that, despite the spike in gas prices late last week in certain parts of the country, same-store sales remained positive for the week and returned back to a positive 3.0-4.0% range by the end of the week. It is a challenging consumer environment, however we believe the investments we have made and continue making in our menu, our team members, operations, and marketing will continue driving our positive sales results and creating long-term value."

Fiscal 2006 Guidance

For its October and November periods, the Company is projecting 3.0% same-store sales growth at Company-owned restaurants. For the second quarter of fiscal 2006, the Company is projecting approximately 2.0% same-store sales growth at Company-owned Ruby Tuesday restaurants. Based on impacts of hurricanes and oil prices on September same-store sales and the resulting same-store sales growth expectation of approximately 2.0% for the second quarter as opposed to the prior 3.0-5.0% estimate, the Company's current estimate for diluted earnings per share for the second quarter is $0.27-$0.28 per share. The Company's previous guidance of diluted earnings per share growth of 12.5-15.0% for the third and fourth quarters based on same-store sales growth of 3.0-5.0% remains unchanged. The Company reminds investors that its fiscal 2006 is a 53-week year and as such its fourth quarter will contain 14 weeks. Thus, its diluted earnings per share growth could be slightly higher than the 12.5-15.0% for that quarter.

The Company's plans for fiscal 2006 still include approximately 60 Company-owned openings and 30-40 franchise openings.

Ruby Tuesday, Inc. has Company-owned, and/or franchise Ruby Tuesday brand restaurants in 42 states, the District of Columbia, Puerto Rico, and 13 foreign countries. As of August 30, 2005, the Company owned and operated 590 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 193 and 40 locations, respectively. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).

The Company will host a conference call which will be a live web-cast tomorrow morning at 8:30 Eastern Time. The call will be available live at the following websites:

    http://www.rubytuesday.com
    http://www.fulldisclosure.com

    Special Note Regarding Forward-Looking Information

This press release contains various "forward-looking statements," which represent the Company's expectations or beliefs concerning future events, including one or more of the following: future financial performance and unit growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayment of debt, payment of dividends, stock repurchase, and restaurant and franchise acquisitions. The Company cautions the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements, including, without limitation, the following: changes in promotional, couponing and advertising strategies; guests' acceptance of changes in menu items; changes in our guests' disposable income; consumer spending trends and habits; mall-traffic trends; increased competition in the casual dining restaurant market; weather conditions in the regions in which Company-owned and franchised restaurants are operated; guests' acceptance of the Company's development prototypes; laws and regulations affecting labor and employee benefit costs; costs and availability of food and beverage inventory; the Company's ability to attract qualified managers, franchisees and team members; changes in the availability of capital; impact of adoption of new accounting standards; effects of actual or threatened future terrorist attacks in the United States; significant fluctuations in energy prices; and general economic conditions.

RUBY TUESDAY, INC.

Financial Results For the First Quarter of Fiscal Year 2006
(Amounts in thousands except per share amounts)



                          13 Weeks           13 Weeks
                           Ended              Ended
                           August             August
                             30,    Percent     31,    Percent Percent
                            2005   of Sales    2004   of Sales Change
                          ----------------- ------------------ -------
                                            (as restated)
                                                 (a)

Revenue:
  Restaurant sales and
   operating revenue      $304,343    98.7   $262,854    98.3
  Franchise revenue          3,880     1.3      4,669     1.7
                          ---------         ----------
      Total operating
       revenue             308,223   100.0    267,523   100.0    15.2

Operating Costs and
 Expenses:
  (as a percent of
   Restaurant sales and
   operating revenue)
      Cost of merchandise   81,643    26.8     67,335    25.6
      Payroll and related
       costs                95,729    31.5     80,103    30.5
      Other restaurant
       operating costs      53,225    17.5     45,576    17.3
      Depreciation and
       amortization         17,174     5.6     15,562     5.9
  (as a percent of Total
   operating revenue)
      Selling, general
       and
       administrative,
       net                  25,959     8.4     14,828     5.5
      Equity in
       (earnings) of
       unconsolidated
       franchises              (64)    0.0     (1,764)   (0.7)
                          ---------         ----------
Total operating costs and
 expenses                  273,666            221,640
                          ---------         ----------

Earnings before Interest
 and Taxes                  34,557    11.2     45,883    17.2   (24.7)

  Interest expense, net      1,913     0.6        592     0.2
                          ---------         ----------

Pre-tax Profit              32,644    10.6     45,291    16.9

  Provision for income
   taxes                    11,001     3.6     16,204     6.1
                          ---------         ----------

Net Income                 $21,643     7.0    $29,087    10.9   (25.6)
                          =========         ==========

Earnings Per Share:
Basic                        $0.34              $0.45           (24.4)
                          =========         ==========
Diluted                      $0.34              $0.44           (22.7)
                          =========         ==========

Shares:
Basic                       63,529             65,244
                          =========         ==========
Diluted                     64,290             66,526
                          =========         ==========


(a) - Amounts reflect the impact of the restatement of our financial
    statements as disclosed in our 10-K/A dated April 26, 2005.



RUBY TUESDAY, INC.

Financial Results For the First Quarter
of Fiscal Year 2006
(Amounts in thousands)


                                               August 30,    May 31,
CONDENSED BALANCE SHEETS                          2005        2005
---------------------------------------------- ----------- -----------
Assets
   Cash and Short-Term Investments                 $7,114     $19,787
   Accounts and Notes Receivable                   10,300       7,627
   Inventories                                     16,681      16,988
   Deferred Income Taxes                            1,659       2,490
   Prepaid Rent                                     3,796       3,759
   Assets Held for Disposal                         5,300       5,342
   Other Current Assets                             8,772       6,421
                                               ----------- -----------

     Total Current Assets                          53,622      62,414

   Property and Equipment, Net                    924,576     901,142
   Goodwill, Net                                   17,017      17,017
   Notes Receivable, Net                           23,519      24,589
   Other Assets                                    71,031      68,905
                                               ----------- -----------

     Total Assets                              $1,089,765  $1,074,067
                                               =========== ===========

Liabilities
   Current Liabilities                           $105,271     $99,813
   Long-Term Debt, including Capital Leases       246,865     247,222
   Deferred Income Taxes                           51,647      50,825
   Deferred Escalating Minimum Rents               37,761      37,471
   Other Deferred Liabilities                      73,717      75,513
                                               ----------- -----------

     Total Liabilities                            515,261     510,844

Shareholders' Equity                              574,504     563,223
                                               ----------- -----------

     Total Liabilities and
       Shareholders' Equity                    $1,089,765  $1,074,067
                                               =========== ===========

CONTACT: Ruby Tuesday, Inc., Maryville
Price Cooper, 865-379-5700

SOURCE: Ruby Tuesday, Inc.