Ruby Tuesday, Inc. Reports First Quarter Fiscal 2007 Diluted Earnings Per Share of $0.37 on Positive Sales Momentum

Business Wire, Oct 11, 2006

MARYVILLE, Tenn. -- Ruby Tuesday, Inc. (NYSE: RI) today reported diluted earnings per share of $0.37 on net income of $21.6 million for the Company's first quarter of fiscal 2007, which ended on September 5, 2006. This represents an 8.8% increase as compared to diluted earnings per share of $0.34 on net income of $21.6 million for the first quarter of the prior year. During Fiscal 2007's first quarter, the Company adopted Statement of Financial Accounting Standards No. 123R "Share-Based Payment" ("SFAS 123R") on a modified prospective basis, which reduced diluted earnings per share by $0.02 in the quarter. Excluding the effect of adopting SFAS 123R, diluted earnings per share were $0.39 and increased 14.7% over the prior year.

Same-restaurant sales for the first quarter decreased 0.5% and increased 1.4% at Company-owned and domestic franchise Ruby Tuesday restaurants, respectively. For the Company's five-week September period ended October 10, 2006, period-to-date same-restaurant sales were down approximately 0.5% and up approximately 4.4% at Company-owned and domestic franchise restaurants, respectively.

First quarter fiscal 2007 period and the five weeks ended October 10, same-restaurant sales:

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Due to the 53rd week in the Company's prior fiscal year, the first calendar week of September falls in the August fiscal period this year and was in the September period last year. So the sales benefit from overlapping hurricane Katrina also falls in the August fiscal period in the current year and is the primary cause of the difference between calendar and fiscal periods. To clarify this, and also to allow for easier comparison to our peers, we are presenting our same-restaurant sales on a calendar month in addition to our fiscal same-restaurant sales:

Calendar 2007 monthly same-restaurant sales:

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Other highlights for the 13-week first quarter include:

* Total revenue increased 9.9% over the same period of the prior year.

* The Company opened seventeen new Ruby Tuesday restaurants during the quarter and acquired seventeen restaurants from its Orlando, Florida franchisee. Two restaurants were closed during the quarter, while three were sold or leased to an existing franchisee.

* Franchisees opened ten new Ruby Tuesday restaurants during the quarter, while one was closed.

* 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 $100,067,000 and $95,903,000 for the first quarter of fiscal 2007 and 2006, respectively. Fiscal 2007 sales at franchise restaurants were reduced due to the acquisition of the Orlando, Florida franchisee.

* Capital expenditures were $40.6 million for the quarter.

* The Company had 58.2 million shares of common stock outstanding at the end of the quarter.

Sandy Beall, Chairman and CEO commented, "With the tough consumer environment, we are pleased with our positive sales momentum throughout the quarter and into September. We believe our calendar monthly same-restaurant sales highlight the benefits from our fiscal 2006 and 2007 initiatives including uncompromising freshness and quality and gracious hospitality. Our July menu, including our new Triple Prime burger and our premium Jumbo Lump Crab Cake, has been well received. Our focus on freshness and quality programs continues with the rollout of our October 16th menu during the second quarter. Our gracious hospitality initiatives - including beverage managers, training managers, and off premise - continue to roll with emphasis on quality, passion, and pride in all that we do. The team member investments we make not only improve service, but continue to result in an all-time low management turnover of below 20%, including management trainees. Our subtle changes in the brand, including new upgraded serving plates, silverware, and uniforms will help us continue to position ourselves as a high quality casual dining concept focused on simple, fresh American dining. We are very excited about the plans we have going forward."

Fiscal 2007 Guidance

The Company is targeting diluted earnings per share of $0.27 to $0.29 for second quarter fiscal 2007 based on same-restaurant sales of flat to up two percent at Company-owned restaurants, continued investments in food and labor, and approximately $0.02 to $0.03 per diluted share impact from stock-based compensation expense. The Company targets diluted earnings per share of $1.70 to $1.75 for fiscal 2007 based on the following:

* 1.0-2.0% same-restaurant sales growth at Company-owned restaurants;

* 45 to 50 Company-owned openings for the year;

* 30 to 35 franchise openings for the year;

* $145-$155 million in capital expenditures for the year;

* Continued future investments in the areas of food and labor;

* Stock-based compensation expense of $0.10 to $0.11 per diluted share.

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 September 5, 2006, the Company owned and operated 658 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 196 and 50 restaurants, respectively. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).