Cheesecake Factory Inc. reported net income on Wednesday that missed analyst estimates, blaming sharply rising dairy costs for cutting into profits.
The Calabasas restaurant chain reported net income of $24.2 million (48 cents a share) in the third quarter ended Sept. 30, compared to $27.4 million (50 cents) in the same period a year earlier. Revenue rose about 6 percent to $499 million.
Analysts on average expected net income of 57 cents on revenue of about $498 million, according to Thomson Financial Network.
Chief Executive David Overton said he was pleased by the company’s 19th consecutive quarter of growth in same store sales despite the higher dairy costs.
U.S. milk futures hit a record high in September for the eighth consecutive month, driving up costs 25 percent since the start of the year.
“There are clearly some significant external cost headwinds in our current environment, including unprecedented increases in butter and related dairy prices during the third quarter, resulting in about $4.3 million of additional expense compared to the third quarter of 2013,” Overton said in a statement.
Comparable restaurant sales rose 2.1 percent at Cheesecake Factory but fell 2 percent at the company’s Grand Lux Café outlets.
Two company owned Cheesecake outlets opened during the quarter – in Reno, Nev. and Trumbull, Conn. – and a third opened last week in Sarasota, Fla. Cheesecake expects to open three more by the end of the year in the United States.
In addition, the company’s licensee partners opened two Cheesecake restaurants in the Middle East and one in Mexico during the third quarter.
In its earnings release, the company also announced a quarterly cash dividend of 16.5 cents per share, payable on Nov. 18 to shareholders of record at the close of business on Nov. 5.
During the third quarter, the company repurchased about 456,000 shares of its common stock at a cost of $19.8 million. Year-to-date, the company repurchased 3.1 million shares of its common stock at a cost of $140.0 million.
Shares closed down 15 cents, or a fraction of a percent, to $44.50 on the Nasdaq. The earnings pushed shares down $1.75 or nearly 4 percent in after-hours trading.