Cheesecake Factory Inc. on Wednesday released preliminary financial results for the second quarter, beating Wall Street estimates for earnings but missing on revenue.
The Calabasas company reported adjusted net income of $38.4 million (78 cents a share) for the period ended July 4. Wall Street analysts on average had expected earnings of 76 cents a share, according to Thomson Financial. Cheesecake saw net profits of $38.6 million during the same quarter last year.
Revenue for the period was $570 million, compared to $559 million in the second quarter of last year. Analysts predicted $571 million.
Same-restaurant sales declined 0.5 percent in the second quarter, a slightly smaller decrease than the company had predicted. Cheesecake warned investors of sales declines in early June when it announced updated guidance for the period, after which the company’s stock tumbled more than 10 percent. The company blamed poor weather and customer volatility for slow sales, which prompted it to adjust its expected results from a 2 percent increase to a 1 percent decline.
“As we communicated in June, we saw volatility in week to week sales trends in the second quarter, indicative of uncertainty on the part of many consumers and unfavorable weather in the East and Midwest,” Chief Executive David Overton said in a statement.
About 20 percent of seats at Cheesecake restaurants are on patios, making its sales vulnerable to rainy conditions, company analyst Sharon Zackfia noted in a blog post in early June.
Until the most recent quarter, the 207 restaurant-strong casual dining group enjoyed seven years of steady sales growth, seemingly immune to the downturn experienced by the rest of the industry. Others in its segment – such as Ihop and Applebee’s parent company DineEquity, based in Glendale – have reported quarter after quarter of sales declines. Some have pegged the lost volume on heightened competition from such fast-casual chains as Chipotle Mexican Grill Inc. and subscription meal delivery services such as Blue Apron Inc., which made an initial public offering on June 28.
Cheesecake announced the results after trading ended on Wednesday, when its stock fell roughly 1 percent (44 cents) to close at $47.13. Share prices declined after hours, dropping about 7 percent to $43.75 at press time.