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4Q09 same-store sales came in better than management’s expectations.

Prior to its presentation at an investor conference, CAKE announced its preliminary sales results for 4Q09.  The company’s comparable sales came in -0.9%.  Although this implies that same-store sales growth on a 2-year average basis decelerated about 20 bps sequentially from 3Q09, this result came in significantly better than management’ guidance of -2% to -3%.  Management had assumed that the shift in timing of both Halloween and Christmas, combined with the shift in its holiday marketing strategy away from retail sales toward a focus on gift card sales, would negatively impact same-store sales by 1%.  The company thought that the change in holiday marketing strategy could dampen sales trends in 4Q09 but build future visits.

Management stated that the strong finish to the year and the sequential improvement in same-store sales from 3Q09 (on a 1-year basis) was “driven almost entirely by guest traffic.”  During the last three quarters, traffic declined about 4%.

Even with this better than expected same-store sales growth in the fourth quarter, management’s 2010 comparable sales guidance of -1% to -2% still assumes an acceleration in 2-year average trends.