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Categories: Corporate Results

Cheesecake Factory Results Disappoint; Stock Falls

Source: Reuters
24/07/2008

Los Angeles, Jul. 24 - Cheesecake Factory Inc posted lower quarterly profit Thursday as the weak economy weighed on sales, and revenue fell short of expectations, sending the restaurant operator's shares down more than 6 percent.

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The company said second-quarter net income was $19.1 million, or 29 cents per share, down from $23.7 million, or 33 cents per share, a year earlier.

Revenue rose to $407.1 million from $373.2 million. Analysts on average were expecting earnings of 29 cents a share on revenue of $412.7 million, according to Reuters Estimates.

Sales at restaurants open at least 18 months fell 4.1 percent.

The company said Wednesday that Chief Financial Officer Michael Dixon had resigned, effectively immediately, and Controller Cheryl Slomann had been appointed interim CFO.

"We find the timing of the departure surprising given that it was seemingly unexpected," Goldman Sachs analyst Steven Kron said in a note e-mailed to journalists on Thursday.

The company, which is working on a new concept called RockSugar Pan Asian Kitchen, said it expects to open two new Cheesecake Factory restaurants in the fourth quarter, bringing the year's total to seven, in line with its expectations.

Cheesecake Factory and other restaurant operators have suffered as the weak economy has led consumers to eat out less. High costs for common ingredients like bread, meat and dairy products have also hurt profits.

Shares of Cheesecake Factory, based in Calabasas Hills, California, were down 96 cents at $15.23 in morning Nasdaq trading.



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