The Cheesecake Factory posted lower-than-expected second quarter
results and also cut its 2014 earnings guidance for the second time
this year. Though adjusted earnings of $0.59 per share increased
9.3% year over year, it missed the Zacks Consensus Estimate by 3.2%
owing to higher total costs and expenses. Though revenues of $496.4
million increased 5.6% year over year, it missed the consensus mark
owing to sluggish traffic. However, comps improved on average check
growth. In fact, the company has been reporting positive comps
since the beginning of 2013. Going forward, we expect the company
to remain well positioned with its pricing actions, and
international expansion in regions with potential for growth.
However, continued underperformance of the Grand Lux Caf , weak
consumer spending and food cost inflation remain headwinds for the
company. Moreover, the repeated guidance cuts raise concerns. We
maintain our Neutral recommendation on the stock.
Founded in 1972 and based in Calabasas Hills, CA, The Cheesecake
Factory Inc. (CAKE), operates upscale, casual, and full-service
dining restaurants in the United States. The company operates 181
full-service, casual dining restaurants throughout the U.S. and
Puerto Rico, including 169 restaurants under The Cheesecake Factory
brand, 11 restaurants under the Grand Lux Cafe brand and one
restaurant under the RockSugar Pan Asian Kitchen brand.
The company also has two bakery production facilities located in
Calabasas Hills and Rocky Mount, N.C. These produce baked desserts
and other products for its restaurants, as well as for other
foodservice operators, retailers, and distributors.
Currently, the company operates through two segments, The
Cheesecake Factory and Other.
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