The Cheesecake Factory Incorporated ( CAKE Quick Quote CAKE - Free Report) reported first-quarter fiscal 2023 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed. The top and bottom lines rose year over year. Incremental pricing and cost-saving efforts resulted in the uptick despite continued inflation, volatility and a dynamic operating environment.
David Overton, chairman and CEO of Cheesecake Factory, stated, “We were pleased with our first quarter performance highlighted by comparable sales growth across our portfolio of concepts. We delivered a solid start to the year with revenue finishing in-line with our expectations and adjusted net income margin at the high end of our guidance range.”
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of 61 cents, beating the Zacks Consensus Estimate of 59 cents. The reported figure represented a 29.8% year-over-year increase.
Total revenues of $866.1 million missed the Zacks Consensus Estimate by 0.3%. However, the top line increased 9.1% on a year-over-year basis.
In the reported quarter, comps at Cheesecake Factory restaurants increased 5.7% year over year compared with a rise of 20.7% in the prior-year quarter. Comps grew 14.9% from the 2019 level.
Costs in Detail
Cost of food and beverage, as a percentage of revenues, increased 10 basis points (bps) year over year to 23.8% in the fiscal first quarter. Labor expenses, as a percentage of total revenues, amounted to 36%, down 130 bps from the year-ago quarter’s levels. Other operating costs, as a percentage of total revenues, were 26.7%, up 50 bps from the prior-year quarter’s level.
General and administrative expenses, accounted for 6.2% of revenues, remained flat year over year. In the fiscal first quarter, pre-opening expenses accounted for 0.3% of revenues, up 10 bps year over year.
As of Apr 4, Cheesecake Factory’s cash and cash equivalents totaled $116.2 million compared with $114.8 million in the previous quarter. Long-term debt (net of issuance costs) was $468.5 million compared with $468 million in the previous quarter. As of Apr 4, the company had total available liquidity of $355 million.
Management declared a quarterly cash dividend of 27 cents per share. The dividend will be payable on Jun 6, to shareholders of record as of May 24. In the fiscal first quarter, CAKE also repurchased 341,500 shares for $12.4 million.
In the quarter under review, Cheesecake Factory opened two restaurants. Management expects to open 20-22 restaurants in fiscal 2023.
Zacks Rank & Key Picks
Cheesecake Factory currently carries a Zacks Rank #3 (Hold).
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