Longbow Downgrades Ruby Tuesday, Concerned Over Lack Of New Product Innovations

Longbow Research on Monday downgraded Ruby Tuesday Inc. RT after the restaurant chain posted disappointing channel checks. Ruby Tuesday is rated as Neutral and a price target is currently unavailable. Analyst Alston Stump wrote, "Our latest checks with Ruby Tuesday franchisees indicated the company continued to struggle, mainly with lack of material new product success over the last 12+ months. Specifically, RT's latest meaningful new product launch in May 2014 was largely disappointing and the concept received limited innovation over the last 6-9 months since May according to our contacts." While same-store sales for Ruby Tuesday were up 5 percent in the company's third quarter earnings report, indications showed that new products provided none of the lift in growth. Analysts are concerned because they don't believe that Ruby Tuesday can rejuvenate business operations without material new product success. Positively, the new management team has made significant strides to install a more objective incentive program for store-level managers and employees as well as area supervisors. However, management has been reluctant to invest in new in-store technology especially in the mobile platform market. Ruby Tuesday recently traded at $6.16, down 5.68 percent.