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Ruby Tuesday, Inc. Reports First Quarter EPS Growth of 19%

10/08/2002

MARYVILLE, Tenn., Oct. 8 -- Ruby Tuesday, Inc. (NYSE: RI) today reported results for its first quarter ended September 3, 2002. For the quarter, earnings per share increased 19% to $0.31 from $0.26 a year ago, net income increased 20% and average unit volumes at Company-owned restaurants increased 3.2%. Same-store sales at Company-owned Ruby Tuesday(R) restaurants increased 1.1% during the quarter. For the quarter, same-store sales at the Company's freestanding restaurants increased 1.9%, while same- store sales at mall restaurants (which represent approximately 30% of the system) decreased 0.4%. During the quarter, the Company exercised its right to acquire 50% ownership in one additional franchisee. The Company now holds a 50% equity interest in each of six franchisees operating (collectively) 61 Ruby Tuesday restaurants. Same-store sales at domestic franchise Ruby Tuesday restaurants decreased 0.6% for the quarter (increased 0.8% excluding franchise restaurants located in Florida and the Denver area).

Sandy Beall, the Company's Chairman and CEO, commented, "Despite a sluggish economy and unpredictable consumer, we continue generating solid results while doing what is right for the long-term success of our business. While I am not pleased with our overall same-store sales performance, it should be noted that our same-store sales growth was accomplished without any advertising and I am pleased with our solid first quarter profitability. Our freestanding restaurants generated solid, positive same-store sales. Our mall restaurants have been somewhat softer, which I believe is being driven by the overall softness in retailing. Our newer units continue performing well as evidenced by the 3.2% increase in average unit volumes, which continues outpacing same-store sales growth."

Beall continued, "We are committed to what we believe creates value for our teams, our brand, our guests and our shareholders. We remain focused on our goal of having each and every restaurant 100% staffed and have even raised the bar on what we consider to be fully staffed. Additionally, we continue investing more money in training our teams. Our menu has broader appeal with each and every update, and we continue enhancing the overall guest experience through better service and products. Our low risk business model, which combines a two-thirds Company-owned system with a one-third franchise operated system, has contributed to twenty-six consecutive quarters of solid performance and has created tremendous shareholder value. Our franchise system continues getting stronger and adding stability to earnings growth. Ruby Tuesday is a strong, proven brand, operating in one of the best segments of the industry with growing demand fueled by continuing demographic shifts and controlled new unit growth."

Outlook for Remainder of Fiscal 2003

Same-store sales at Company-owned Ruby Tuesday restaurants were down 0.7% through the first four weeks of the second quarter after overlapping the two highest weeks of coupon redemptions in the prior year. Commenting on the remainder of the year, Beall, "We are very comfortable with $0.27 in earnings per share for the second quarter (a 17% increase over the prior year) assuming approximately flat same-store sales for the second quarter. If we end the second quarter up 0.5% to 1.0% in same-store sales, we would be comfortable with $0.28 in earnings per share for the quarter. For the year, we expect earnings per share growth to be in the 17-20% range. Although our goal for third and fourth quarter same-store sales is 2.0%, if same-store sales are flat for the third and fourth quarters, we would still expect to have earnings per share growth of approximately 17% for the year (excluding the non- recurring charge recorded in fiscal 2002 to fully reserve the Specialty Restaurant Group, LLC note receivable) even after absorbing approximately $5.5 million in additional depreciation in conjunction with unwinding our bank- financed operating leases. If the economy rebounds and same-store sales grow in the 1% to 2% range, we should be able to grow earnings per share in the 18- 20% range."

    First Quarter Highlights:
    * Earnings per share increased 19% to $0.31 from $0.26.
    * Net income increased 20% to $20,189,000 from $16,841,000.
    * Pre-tax profit margins increased 100 basis points to 13.9% from 12.9%.
    * System-wide Ruby Tuesday revenue increased 12.5% to $314,340,000 from
      $279,339,000.
    * Average unit volumes increased 3.2% at Company-owned Ruby Tuesday
      restaurants.
    * Company-owned freestanding unit same-store sales increased
      1.9%.  Company-owned mall unit same-store sales decreased 0.4%.
      Domestic franchise same-store sales decreased 0.6% (increased 0.8%
      excluding franchise units in Florida and the Denver area). System-wide
      same-store sales increased 0.6%.
    * Thirteen Company-owned Ruby Tuesday restaurants were opened and five
      were closed.
    * Six franchise units were opened and two were closed.
    * The Company purchased 548,000 shares of its common stock during the
      quarter. 5.3 million shares remain authorized for repurchase under the
      Company's ongoing share repurchase program.

As of September 3, 2002, Ruby Tuesday, Inc. owned and operated 405 Ruby Tuesday restaurants located in 25 states. Franchise operations included 185 domestic units and 18 international units. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).

For more information, contact: Price Cooper Phone: 865-379-5700

The Company will host a conference call, which will be a live web-cast, this afternoon at 2:00 Eastern Time. The call will be available live at the following web sites:

http://www.companyboardroom.com http://www.rubytuesday.com

The call will be archived on both sites through the close of business on October 15, 2002.

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 the following: future financial performance and unit growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayment of debt, and payment of dividends. The Company cautions that a number of important factors 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: 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; consumers' 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; and general economic conditions.


    RUBY TUESDAY, INC.
    Financial Results For the First Quarter of Fiscal Year 2003 (unaudited)
    (Amounts in thousands except per share amounts)




                                   13 Weeks         13 Weeks
                                    Ended            Ended
                                  September        September
                                      3,    Percent    4,    Percent  Percent
                                               of               of
                                     2002    Sales    2001    Sales   Change
    System-Wide Sales:
    Company-owned Ruby Tuesday
     revenue                     $ 218,713         $ 199,692
    Franchised revenue              95,627            79,647
      Total system-wide sales    $ 314,340         $ 279,339           12.5

    Revenues:
     Company restaurant revenues $ 218,713   98.3  $ 199,692   98.4     9.5
     Franchise income                3,799    1.7      3,292    1.6
      Total operating revenues     222,512  100.0    202,984  100.0     9.6

    Operating Costs and Expenses:
    (as a percent of Company
     restaurant revenues)
      Cost of merchandise           58,865   26.9     53,369   26.7
      Payroll and related costs     74,439   34.0     64,737   32.4
      Other restaurant
       operating costs              38,451   17.6     40,327   20.2
      Depreciation and
       amortization                  9,999    4.6      8,084    4.0
     (as a percent of Total
      operating revenues)
      Selling, general and
       administrative               10,864    4.9     11,608    5.7
      Equity in earnings of
       unconsolidated
       franchises                     (565)  (0.3)        41    0.0
    Total operating costs and
     expenses                      192,053           178,166

    Earnings before Interest, Taxes
     and Cumulative effect of change in
     accounting principle           30,459   13.7     24,818   12.2    22.7

     Interest income, net             (506)  (0.2)    (1,383)  (0.7)

     Provision for income taxes     10,776    4.8      9,302    4.6

    Income before cumulative effect
     of change in accounting
     principle                      20,189    9.1     16,899    8.3

    Cumulative effect of change in
     accounting principle, net          --    0.0         58    0.0

    Net Income                    $ 20,189    9.1   $ 16,841    8.3    19.9

    Earnings Per Share:

    Before cumulative effect of
     change in accounting principle:
    Basic                         $   0.32          $   0.27           18.5
    Diluted                       $   0.31          $   0.26           19.2

    After cumulative effect of
     change in accounting principle:
    Basic                         $   0.32          $   0.27           18.5
    Diluted                       $   0.31          $   0.26           19.2

    Shares:
    Basic                           63,818            63,245
    Diluted                         65,101            65,187




    RUBY TUESDAY, INC.

    Financial Results For the First Quarter
    of Fiscal Year 2003 (unaudited)
    (Amounts in thousands except per share amounts)

                                               September 3,       June 4,
    CONDENSED BALANCE SHEETS                       2002            2002
    Assets
     Cash and Short-Term Investments            $  17,263       $  32,699
     Accounts and Notes Receivable                 15,928          15,671
     Inventories                                   11,232          10,276
     Deferred Income Taxes                          2,924           4,248
     Income Tax Receivable                          7,877          15,050
     Assets Held for Disposal                       4,437           3,242
     Other Current Assets                           7,522           7,690

       Total Current Assets                        67,183          88,876

     Property and Equipment, Net                  587,647         351,921
     Goodwill, Net                                  7,845           7,845
     Notes Receivable, Net                         35,092          35,655
     Other Assets                                  38,385          36,030

       Total Assets                             $ 736,152       $ 520,327

    Liabilities
     Current Liabilities                        $  87,813       $  93,283
     Long-Term Debt                               218,596           7,626
     Deferred Income Taxes                         25,797          24,255
     Other Deferred Liabilities                    60,620          60,757

       Total Liabilities                          392,826         185,921

    Shareholders' Equity                          343,326         334,406

       Total Liabilities and
        Shareholders' Equity                    $ 736,152       $ 520,327

SOURCE Ruby Tuesday, Inc.

Web site: http://www.rubytuesday.com

CONTACT: Price Cooper of Ruby Tuesday, Inc., +1-865-379-5700