Cheesecake Factory is not only a large chain of 194 restaurants, but it is also a widely known producer of bakery products. The company operates two factories in California and North Carolina and it sustains other businesses’ menus. However, the distributor of cheesecakes has just ended a disappointing financial quarter. The excuse of the executives was that the bad weather interfered with their production efforts. On the other hand, the investors frowned at this explanation.
Bad Performance Urged Cheesecake Factory to Calibrate Outlook for the Second Quarter
On Tuesday, shares in Cheesecake Factory plunged 8%. After an unproductive start of the year, the company decided to lower its expectations for the second quarter of 2017. As a consequence, comparable sales might lower in the upcoming period by 1%. This adjustment is in contradiction with the previous outlook which used to indicate an up to 2% growth for the quarter. According to FactSet, analysts are looking at a 1.7% increase on average.
CEO David Overton Explained the Unmet Expectations as a Weather Casualty
David Overton, the CEO of the company, was first to explain the unfortunate phenomenon. Based on his business’s reports, the first quarter didn’t have a smooth evolution. On the contrary, the activity was affected here and there by short periods of lower productivity. These periods coincided with bad weather conditions in the Midwest and East regions of the country. As a consequence, the “patio usage” was down which led to defected productivity.
This explanation appeared weeks after the company failed to meet expectations for the first quarter. While managers were aiming at a revenue of $570.08 million for a same-store sales increase of 0.6%, the actual numbers revealed gains of $563.4 million while sales rose 0.3%. With a recently adopted precarious attitude, the cheesecake producer is prepared for lower margins and earnings per share for the second quarter.
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