Cheesecake Factory Inc. 's ( CAKE ) earnings of 51
cents a share in the fourth quarter of 2012 missed the Zacks
Consensus Estimate by a penny and were down 3.8% year over year due
to sluggish sales. Hurricane Sandy hurt earnings per share by
around 1-1.5 cents.
Cheesecake Factory's revenues fell 2.7% year over year to $464.7
million and lagged the Zacks Consensus Estimate of $467.0 million.
Tough year-over-year comparison owing to an extra week in the
fourth quarter of 2011 hurt sales to some extent. Further,
Hurricane Sandy played foul with the quarterly sales.
Inside the Headline Numbers
Comparable restaurant sales grew 0.9% in the reported quarter
including the adverse impact of 60 basis points owing to Hurricane
Sandy. Excluding this weather impact, comparable restaurant sales
increased 1.5%. Comparable store sales increased 1.3% at Cheesecake
Factory concept but slid 3.2% at the company's another concept,
Grand Lux Cafe.
Operating margin in the fourth quarter shrank 190 basis points
(bps) year over year to 6.1% mainly due to reduced revenues
overshadowing the benign cost structure. Cost of sales, as a
percentage of revenues, declined 30 bps due to favorable bakery
dairy costs as well as a bakery mix shift benefit. Other operating
costs were down 20 bps driven by a favorable year-over-year
comparison in bakery operations and lower marketing costs.
The company currently operates 177 restaurants, including the
units opened during the fourth quarter. In 2012, the company
unveiled 3 units in the Middle East.
At present, management aims to open as many as 8 to 10 new
company-owned restaurants in fiscal 2013. The company is slated to
open 3 new units internationally in fiscal 2013. The company also
remains geared to expand in Latin America. Its first location in
Latin America is expected to be opened in early 2014 in Mexico
In fiscal 2012, Cheesecake's adjusted earnings per share were
$1.88, up 14.6% year over year. Revenues grew 2.9% to $1.81 billion
buoyed by a modest increase in comps.
GuidanceBURGER KING WWD (BKW): Free Stock Analysis
ReportCHEESECAKE FACT (CAKE): Free Stock Analysis
ReportKRISPY KREME (KKD): Free Stock Analysis ReportRED ROBIN GOURM (RRGB): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
For the first quarter of 2013, earnings per share are guided
between 40-43 cents. Comparable store sales are expected to be flat
to up 1% mainly due to the temporary shutdown of the restaurant in
Hawaii owing to a fire and the adverse impact of the storm that hit
the Northeast in early February.
For 2013, earnings per share are expected in the range of
$2.10-$2.18 while comparable sales growth is projected in the range
of 1.5%-2.5%. Management expects food cost inflation to be about
3.2% in 2013.
Management expects operating margins to grow in 2013 mainly driven
by international growth as evident by the initial three Middle East
units registering higher-than-expected volume growth. The
additional locations scheduled to open in 2013 are also expected to
contribute nicely to 2013 margins.
The company is suffering on the sales front. It is likely to face
some headwinds in its upcoming first quarter. Additionally, the
recent comps underperformance by Grand Lux Café remains another
However, Cheesecake's focus on cost containment efforts,
relatively benign food cost inflation, as well as international
expansion is quite encouraging.
Cheesecake Factory currently carries a Zacks Rank #2 (Buy). Some
restaurant companies that are also worth a look at the current
level are Red Robin Gourmet Burgers Inc. ( RRGB ) carrying a
Zacks Rank #1 (Strong Buy) as well as Burger King Worldwide
Inc. ( BKW
) and Krispy Kreme Doughnuts, Inc. ( KKD ), both carrying a
Zacks Rank #2 (Buy).