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Ruby Employs Darden Official as CEO

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Ruby Tuesday Inc.’s search for a competent chief executive officer (CEO) has finally come to an end. Recently, the company revealed that it has appointed JJ Buettgen for the position of CEO and president, effective December 1, 2012. Moreover, Mathew Drapkin, previously the Lead Director, has now been assigned as Chairman of the Board.

The management churn came in the wake of the founder, chairman, president and CEO Sandy Beall’s resignation in June this year. Since then, Knoxville, Tennessee-based Ruby Tuesday was on an extensive lookout for a suitable replacement. During this session of leadership changes, Beall continued to assume all three aforesaid positions to ensure a smooth transition.

Sandy Beall is retiring after running the Tennessee-based company for 40 years. Under his leadership, the company achieved new heights in terms of overall performance and profitability, implementation of strategies, and organic as well as inorganic expansion. He opened the first Ruby Tuesday outlet in Knoxville, Tennessee in the year 1972.

The newly appointed CEO, Buettgen, has donned many important roles in his illustrious career. Before signing in for Ruby Tuesday, Buettgen held the posts of senior vice president and chief marketing officer at Darden Restaurants Inc. (DRI - Free Report) – a renowned full-service restaurant operating company with a multi-brand portfolio of more than 2,000 casual dining eateries and combined revenues of more than $2,000 million.

Prior to that, Buettgen worked as senior vice president of business development for Darden and as president for Smokey Bones Barbeque & Grill. Buettgen was also associated with the companies like Disneyland Resorts, Brinker International Inc. (EAT - Free Report) and General Mills Inc. (GIS - Free Report) in his rich career of 20 years.  

With his vast know-how in the restaurant and consumer industries, Buettgen can easily be tagged as a veteran in these sectors. Furthermore, with his affluent knowledge in business development and brand building, we expect him to provide meaningful support to Ruby Tuesday.

While we prefer the company’s future strategies including improving margins by lowering costs, driving same-restaurant sales through several value offerings, focusing on low capital growth opportunities and returning excess cash to shareholders, its failure to meet the Zacks Consensus Estimates in the first quarter of 2013 concerns us a bit. In addition, the company’s sales growth has also been sluggish and needs further impetus to surge ahead.

Hence, the new role for Buettgen invests him with additional responsibility in a sluggish business environment. Ruby Tuesday currently retains a Zacks #2 Rank, implying a short-term ‘Buy’ rating on the stock. We are also maintaining our long-term ‘Neutral’ recommendation on the stock.

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