Cheesecake Factory shares fall after forecast

NEW YORK (Reuters) - Cheesecake Factory Inc. (CAKE.O) shares fell 7 percent on Thursday, a day after the restaurant chain operator forecast second-quarter revenue growth and margins that were below some Wall Street estimates.

During a presentation at the William Blair Growth Stock Conference, which was also broadcast over the Internet, Chief Financial Officer Michael Dixon said second-quarter revenue would increase 14.5 percent to 15.5 percent.

He also forecast that the quarterly operating income margin would be slightly more than 1 percentage point lower than in the year-ago period.

Bear Stearns analyst Joseph Buckley, who had been projecting revenue growth of 16 percent to 17 percent, said these figures imply earnings per share of 31 cents, which is lower than his estimate of 34 cents.

Buckley downgraded the stock to "peer perform" from "outperform," and lowered his second-quarter and full-year estimates on the news.

Cheesecake Factory cited industry-wide softness for the revenue forecast and higher dairy costs for the margin pressure.

"Following flat-to-positive same-store sales the prior two quarters and positive comments on April sales, we had expected Cheesecake Factory to be well-positioned to meet earnings expectations in 2007," Buckley wrote in a research note. "Another earnings miss will lower already shaky investor confidence in our view."

He added that casual dining sales, which have suffered at the hands of higher gas prices and the slowing housing market, have improved some in June, but remain lackluster despite easy comparisons.

Cheesecake Factory shares, which have fallen nearly 2 percent over the last year, were down $1.95 at $24.80 on the New York Stock Exchange.