Cheesecake Factory suspends stock buyback plan
October 17, 2008
by Eric Schroeder
CALABASAS HILLS, CALIF. — The Cheesecake Factory Inc. announced it has suspended its stock repurchase authorization and terminated its prearranged stock repurchase plan.
"The company believes that conserving cash in order to maintain maximum flexibility in its capital decisions is a prudent and appropriate action in light of the unprecedented crisis in the global financial markets and the indeterminate future impact it could have on the overall economy," the Cheesecake Factory said.
As of Oct. 16, the Cheesecake Factory had repurchased 9.6 million shares of its common stuck during fiscal 2008 at a total cost of approximately $172 million. The company earlier had said it would repurchase between $150 million and $200 million of its common stock during fiscal 2008, and the company still has authorization to buyback approximately 7.9 million shares remaining under the temporarily suspended 31 million share repurchase authorization.
The company’s share price has taken a nose dive during the past year, falling from the mid-$20 range to below $10 on Oct. 17. The decline in the share price has been particularly sharp in the past month, falling to $9.76 in early trading on Oct. 17 from as high as $18.37 on Sept. 19, a decline of 47%.