Moody’s: Ruby Tuesday view to negative

Moody's Investors Service said it affirmed the ratings of Ruby Tuesday, Inc., including its B3 corporate family rating, B3-PD probability of default rating and Caa1 senior unsecured rating.

The outlook was revised to negative from stable and the speculative grade liquidity rating was lowered to SGL-4 from SGL-3.

"The revision of Ruby Tuesday's rating outlook to negative reflects Moody's expectations that following a weak second quarter ended November 29, 2016 – including negative adjusted EBITDA and negative same store sales and traffic – it will be more difficult to achieve the improvements expected when the company announced its Fresh Start Initiative in August," Moody’s assistant vice president, analyst Peter Trombetta said in a news release.

"Earnings pressure is being caused by the closure of over 100 stores in the past 6 months, a high level of promotional activity from its competitors and higher labor costs."

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