Ruth’s Hospitality Group, Inc. (RUTH), one of the leading upscale dining restaurant operators, recently posted lower-than-expected preliminary fourth-quarter 2009 sales results, sending its shares down 4.1% to $2.32 in after-hours trading, after closing at $2.42 per share on Monday, up 15.8% from the previous day.

Based in Heathrow, Florida, Ruth’s company-owned restaurant sales fell 10.5% to $83.7 million from $93.5 million posted in the prior-year quarter. The Zacks Consensus Sales Estimate for the quarter was $89 million.

The adjustment for sales discounts in the quarter was $2.1 million compared to $3 million in the year-ago quarter.

The parent of Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts, hinted at some stability in the sales environment. The company also notified that although sales volume has fallen from the 2008 level, but unit level cash flow and return on capital continue to remain robust, driven by effective cost management. Free cash flow generation had helped the company lower its debt by nearly $35 million in fiscal 2009.

Company-owned same-store sales at Ruth’s Chris Steak House dropped 11.2% in fourth-quarter 2009 compared to an 18.7% decline posted in fourth-quarter 2008. Comparable same-store sales at Mitchell’s Fish Market fell 2.6%.

Restaurants in the upscale and casual dining segments are experiencing sagging comps and declining traffic with cash-strapped consumers shifting to low-priced dining options and other fast-food chains, such as Yum! Brands Inc. (YUM), Burger King Holdings (BKC), McDonald’s Corporation (MCD), and Chipotle Mexican Grill (CMG).

Ruth’s, the upscale steakhouse chain, currently operates more than 150 company and franchisee locations worldwide.

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