* Q3 adj eps $0.26 tops Wall Street view of $0.11

* Sales declines eased each month of quarter

* Says in compliance with debt covenants at end of Q3

* Shares rise more than 10.5 percent after hours (Adds outlook, company comment, analyst comment, byline; updates share activity)

By Lisa Baertlein

LOS ANGELES, April 7 (Reuters) - Ruby Tuesday Inc (RT.N: Quote, Profile, Research) reported an operating quarterly profit that beat expectations and said promotional efforts gave a boost to slower sales at established restaurants, sending its shares up more than 10 percent.

Morgan Keegan analyst Robert Derrington attributed the stock move to the company's modest improvement in sales combined with much better-than-projected control on costs at the chain, which has been grappling with consumers spending less money during the prolonged recession.

Ruby Tuesday's took advantage of lower advertising rates to promote aggressively during the quarter, when it offered a buy one dinner item, get one free special.

Sales at established, company-owned Ruby Tuesday restaurants dropped 9 percent in December, fell 5.9 percent in January and declined 6.8 percent in February.