The Cheesecake Factory swings to a £3.18 million net loss in the first quarter

The Cheesecake Factory (NASDAQ: CAKE) released its quarterly financial report on Tuesday that showed it to have swung to a loss in the fiscal first quarter. The company attributed its downbeat performance to the Coronavirus pandemic that pushed it into furloughing thousands of its employees as it temporarily closed its restaurants to minimize the fast transmission of the flu-like virus.

Following the release of the performance results, the Cheesecake Factory jumped 2.5% at first in after-hours trading on Tuesday. It was, however, reported to have settled around the same level at which it closed the regular session later on.

Cheesecake Factory’s Q1 financial results versus analysts’ estimates

According to Refinitiv, experts had forecast the company to print £494 million in revenue in the first quarter. On the earnings front, they had estimated 31 pence per share. In its report on Tuesday, the Cheesecake Factory boasted a higher revenue of £497 million in Q1 but its adjusted earnings per share came in significantly lower at 3.2 pence per share. The revenue, however, was reported 2.6% up an on annualized basis.

In the first quarter, the American restaurant company registered a £3.18 million net loss versus £21.82 million in net income in the same quarter last year. The Cheesecake Factory also said that free meals and health care for its furloughed employees fuelled a £3.23 million charge in the recent quarter.

The Cheesecake Factory closed last month with £210 million in cash. To shore up liquidity, the company suspended its share repurchase programme and dividend for 2020. Its long-term debt, at the end of Q1, was £307,034.

Cheesecake Factory’s same-store sales decline by 12.9% in Q1

The Cheesecake Factory also saw a 12.9% decline in its comparable stores' sales in the first quarter attributed to COVID-19 that has so far infected more than 1.2 million people in the U.S and caused over 72,000 deaths. The company expects 15% of its countrywide dining rooms to reopen before the start of June.

The American restaurant company secured a £162 million investment in mid-April from Roark Capital.

At £16 per share, the Cheesecake Factory is currently around 50% down year to date in the stock market. Its struggle in the stock market, however, started even before the outbreak. In 2019, the Cheesecake Factory posted an annual decline of roughly 7%.

At the time of writing, the Cheesecake Factory is valued at £717 million and has a price to earnings ratio of 6.83.