MARYVILLE, TN and SAN DIEGO — An investor of Ruby Tuesday, Inc. (NYSE: RT) has filed a federal securities fraud class action complaint in the U.S. District Court for the Middle District of Tennessee, Nashville Division. The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between April 11, 2013 and October 9, 2013 (the "Class Period"). Ruby Tuesday owns, develops, operates and franchises a chain of casual dining restaurants.
Ruby Tuesday is accused of misrepresenting its financial status.
According to the complaint, shares of Ruby Tuesday fell multiple times beginning with the release of the company's fourth quarter and fiscal 2013 financial results on July 24, 2013, in which Ruby Tuesday disclosed a 3.1% decrease in same restaurant sales at company-owned restaurants and a 5.1% decrease in sales at domestic franchise restaurants for the fourth quarter. A net loss of $27 million was also reported for the fourth quarter from continuing operations compared to $6.7 million in the fourth quarter 2012. Ruby Tuesday revenue also decreased 4.6% for fiscal 2013 compared to the year prior. On this news, Ruby Tuesday stock declined $1.24 per share, to close at $7.84 per share on July 25, 2013.
Ruby Tuesday stock plummeted a second time on October 10, 2013, declining $1.29 per share to close at $6.26 per share following the company's October 9, 2013 report of a net loss of $22.2 million on $289.7 million in revenues during its first quarter 2014, an increase of 7.7% on losses and a decrease of 11.7% on revenues.
The complaint further alleges that, during the class period, Ruby Tuesday failed to disclose to investors that: (i) increasing the range of price points on its menus was negatively impacting sales by decreasing the average check price without increasing customers; (ii) same-store sales were declining despite reported progress; (iii) the decline in sales at its Lime Fresh restaurants, and subsequent lack of impairments on Lime Fresh assets led to a material understatement of the company's losses and expenses; and (iv) the company's deferred tax assets were over-stated by $20.1 million.
If you invested in Ruby Tuesday and would like to discuss your shareholder rights, you may contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the information form on the firm's shareholder rights blog: https://www.robbinsarroyo.com/shareholders-rights-blog/ruby-tuesday-inc/
Robbins Arroyo LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
Source: Robbins Arroyo LLP
