Shares of Cheesecake Factory Inc. dropped more than 12 percent on Wednesday, a day after the company reported second-quarter earnings that failed to meet Wall Street estimates.
The stock of the Calabasas-based restaurant group closed at $49.06 on the New York Stock Exchange, a drop of just under $7 a share from the previous day. Late Tuesday the company reported profits of $28.4 million and adjusted earnings of 65 cents a share for the period ended July 3. Analysts were expecting 81 cents a share, according to Thomson Financial.
Revenue for the quarter was $593 million, up 4 percent from the prior year and aligned with analysts’ predictions. Same-restaurant sales at the company’s Cheesecake Factory locations increased 1.4 percent.
The firm blamed higher-than-expected group medical insurance and legal expenses for the earnings miss. Wage hikes and overtime pay also have eaten into the company’s revenue; labor equaled about 36 percent of revenue, an increase from a little more than 34 percent last year, Executive Vice President Matthew Clark said during a conference call with investors.