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Cheesecake Factory (CAKE) Q2 Earnings & Revenues Lag Estimates
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The Cheesecake Factory Incorporated (CAKE - Free Report) reported second-quarter fiscal 2022 results, with both its earnings and revenues missing the Zacks Consensus Estimate. Earnings missed the consensus estimate for the fourth straight quarter.
David Overton, chairman and CEO of Cheesecake Factory, stated, “The inflationary environment remains dynamic and in the second quarter we faced measurably higher costs than anticipated. Despite these near-term headwinds, we remain committed to returning margins to pre-pandemic levels while managing our business for the long-term.”
Earnings & Revenues Discussion
In the quarter under review, adjusted earnings per share (EPS) came in at 52 cents, missing the Zacks Consensus Estimate of 78 cents. In the prior-year quarter, the company had reported an adjusted EPS of 80 cents.
During the fiscal second quarter, total revenues of $832.6 million missed the Zacks Consensus Estimate of $841 million. The top line surged 8.3% on a year-over-year basis. The upside can be primarily attributed to solid off-premise sales growth.
During the reported quarter, comps at Cheesecake Factory restaurants increased 4.7% year over year compared with a 20.7% increase in the prior-year quarter.
The Cheesecake Factory Incorporated Price, Consensus and EPS Surprise
Cost of sales, as a percentage of revenues, increased 250 basis points (bps) year over year to 24.5% in the fiscal second quarter. Labor expenses, as a percentage of total revenues, amounted to 36.6%, up 90 bps from the year-ago quarter’s levels. Other operating costs (as a percentage of total revenues) came in at 26.3%, up 40 bps from the prior-year quarter’s levels.
General and administrative (G&A) expenses accounted for 6% of revenues compared with 6.3% in the prior-year quarter. In the reported quarter, pre-opening expenses accounted for 0.4% of revenues, flat year over year.
Balance Sheet
As of Jun 28, 2022, Cheesecake Factory’s cash and cash equivalents totaled $194.9 million compared with $189.6 million as of Dec 28, 2021. During the fiscal second quarter, long-term debt (net of issuance costs) came in at $467 million compared with $466 million as of Dec 28, 2021.
The company declared a quarterly cash dividend of 27 cents per share. The dividend will be payable on Aug 23, 2022, to its shareholders of record as of Aug 10, 2022.
Store Developments
In fiscal 2022, the company anticipates opening as many as 15 new restaurants comprising four Cheesecake Factory restaurants, four North Italia restaurants and seven FRC restaurants (including three Flower Child locations). Internationally, it intends to open one Cheesecake Factory restaurant under a licensing agreement.
Zacks Rank & Key Picks
Cheesecake Factory currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Dollar Tree Inc. (DLTR - Free Report) , Designer Brands Inc. (DBI - Free Report) and Potbelly Corporation (PBPB - Free Report) .
Dollar Tree currently sports a Zacks Rank #1. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. The stock has gained 67.4% in the past year.
The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the corresponding year-ago period’s levels.
Designer Brands flaunts a Zacks Rank of 1 at present. DBI has a trailing four-quarter earnings surprise of 102.5%, on average. Shares of DBI have increased 2.5% in the past year.
The Zacks Consensus Estimate for Designer Brands’ 2023 sales and EPS suggests growth of 6.9% and 16.5%, respectively, from the comparable year-ago period.
Potbelly is currently Zacks #1 Ranked. PBPB has a trailing four-quarter earnings surprise of 26.2%, on average. Shares of PBPB have declined 21.2% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 14.6% and 94.2%, respectively, from the corresponding year-ago period’s levels.
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Cheesecake Factory (CAKE) Q2 Earnings & Revenues Lag Estimates
The Cheesecake Factory Incorporated (CAKE - Free Report) reported second-quarter fiscal 2022 results, with both its earnings and revenues missing the Zacks Consensus Estimate. Earnings missed the consensus estimate for the fourth straight quarter.
David Overton, chairman and CEO of Cheesecake Factory, stated, “The inflationary environment remains dynamic and in the second quarter we faced measurably higher costs than anticipated. Despite these near-term headwinds, we remain committed to returning margins to pre-pandemic levels while managing our business for the long-term.”
Earnings & Revenues Discussion
In the quarter under review, adjusted earnings per share (EPS) came in at 52 cents, missing the Zacks Consensus Estimate of 78 cents. In the prior-year quarter, the company had reported an adjusted EPS of 80 cents.
During the fiscal second quarter, total revenues of $832.6 million missed the Zacks Consensus Estimate of $841 million. The top line surged 8.3% on a year-over-year basis. The upside can be primarily attributed to solid off-premise sales growth.
During the reported quarter, comps at Cheesecake Factory restaurants increased 4.7% year over year compared with a 20.7% increase in the prior-year quarter.
The Cheesecake Factory Incorporated Price, Consensus and EPS Surprise
The Cheesecake Factory Incorporated price-consensus-eps-surprise-chart | The Cheesecake Factory Incorporated Quote
Costs in Detail
Cost of sales, as a percentage of revenues, increased 250 basis points (bps) year over year to 24.5% in the fiscal second quarter. Labor expenses, as a percentage of total revenues, amounted to 36.6%, up 90 bps from the year-ago quarter’s levels. Other operating costs (as a percentage of total revenues) came in at 26.3%, up 40 bps from the prior-year quarter’s levels.
General and administrative (G&A) expenses accounted for 6% of revenues compared with 6.3% in the prior-year quarter. In the reported quarter, pre-opening expenses accounted for 0.4% of revenues, flat year over year.
Balance Sheet
As of Jun 28, 2022, Cheesecake Factory’s cash and cash equivalents totaled $194.9 million compared with $189.6 million as of Dec 28, 2021. During the fiscal second quarter, long-term debt (net of issuance costs) came in at $467 million compared with $466 million as of Dec 28, 2021.
The company declared a quarterly cash dividend of 27 cents per share. The dividend will be payable on Aug 23, 2022, to its shareholders of record as of Aug 10, 2022.
Store Developments
In fiscal 2022, the company anticipates opening as many as 15 new restaurants comprising four Cheesecake Factory restaurants, four North Italia restaurants and seven FRC restaurants (including three Flower Child locations). Internationally, it intends to open one Cheesecake Factory restaurant under a licensing agreement.
Zacks Rank & Key Picks
Cheesecake Factory currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Dollar Tree Inc. (DLTR - Free Report) , Designer Brands Inc. (DBI - Free Report) and Potbelly Corporation (PBPB - Free Report) .
Dollar Tree currently sports a Zacks Rank #1. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. The stock has gained 67.4% in the past year.
The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the corresponding year-ago period’s levels.
Designer Brands flaunts a Zacks Rank of 1 at present. DBI has a trailing four-quarter earnings surprise of 102.5%, on average. Shares of DBI have increased 2.5% in the past year.
The Zacks Consensus Estimate for Designer Brands’ 2023 sales and EPS suggests growth of 6.9% and 16.5%, respectively, from the comparable year-ago period.
Potbelly is currently Zacks #1 Ranked. PBPB has a trailing four-quarter earnings surprise of 26.2%, on average. Shares of PBPB have declined 21.2% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 14.6% and 94.2%, respectively, from the corresponding year-ago period’s levels.