Cracker Barrel Beats, Guidance Up - Analyst Blog
February 28 2013 - 1:03PM
Zacks
Tennessee-based Cracker Barrel Old Country Store
Inc.'s (CBRL) second-quarter fiscal 2013 adjusted earnings
of $1.43 per share comfortably beat the Zacks Consensus Estimate of
$1.24 by 15.3%.
Earnings also significantly beat guidance range of $1.22 and
$1.27 per share, while growing 19.2% year over year. The
better-than-expected earnings results were driven by the company’s
comparable sales (comps) growth.
Total revenues for the second quarter climbed 4.4% year over
year to $702.7 million, thanks to positive comps growth and higher
restaurant sales. The quarterly revenues also surpassed the Zacks
Consensus Estimate of $694 million.
Quarter Details
The company operates through two segments: restaurant and
retail. Cracker Barrel through its restaurants serves a wide range
of menu items for breakfast, lunch, and dinner whereas its retail
services provide various products including rocking chairs, gifts,
toys, apparel, cookware and foods.
Restaurant
Restaurant revenues jumped 4.9% year over year to $528.2
million. Comparable store restaurant sales rose 3.3% on the back of
a 3.1% improvement in average check and a 2.6% upside in menu
prices.
Retail
Retail revenues surged 2.8% annually to $174.5 million.
Comparable store retail sales in the quarter also crept up 3.1%.
Comps at both restaurant and retails were adversely impacted by
lower traffic.
Gross margin in the quarter expanded 20 basis points (bps) to
65.2%. Further, adjusted operating margin enhanced 90 bps year over
year to 8.4% in the quarter, attributable to decrease in general
and administrative as well as other store operating expenses and
labor and related costs.
Store Update
During the quarter, Cracker Barrel opened one new restaurant.
Year to date, the company has unveiled 5 new units. Thus, at the
end of the third quarter, the company had 621 units across 42
locations.
The company is planning to launch 8 new Cracker Barrel stores in
fiscal 2013.
Financial Position
At the end of second quarter of fiscal 2013, Cracker Barrel had
cash and cash equivalents of approximately $186.1 million versus
$118.7 million in the previous quarter. Long-term debt was $512.5
million as compared with $518.8 million in the first quarter.
Fiscal 2013 Outlook Upped
The company raised its earnings guidance for fiscal 2013, based
on its improved financial performance till date. Adjusted earnings
are now expected in the range of $4.60 to $4.80, increased from
previous guidance of $4.50 to $4.70.
The company however maintained its guidance for revenues, comps
and adjusted operating margin. Revenues are expected in the range
of $2.6 billion and $2.65 billion while comparable restaurant and
retail sales are expected to increase in the range of 2.0% to 3.0%.
Adjusted operating margin is estimated to be within 7.3% to
7.5%.
Third Quarter Guidance
The company expects third quarter earnings per share in the
range of 90 cents to 95 cents.
Our Take
We are impressed by the company’s better-than-expected financial
performances and higher earnings outlook for 2013. In the near
term, the company is taking several initiatives like refining menu
pricing, growing units and improving restaurant operations and
services to drive traffic and sales in future quarters. However,
cost inflation, uncertain economic conditions, bad weather
conditions, remain challenges, going forward.
Cracker Barrel carries a Zacks Rank #4 (Sell). Another
restaurateur Red Robin Gourmet Burgers Inc.’s
(RRGB) adjusted earnings in the fourth quarter of 2012 was way
ahead of the Zacks Consensus Estimate as well as the year-ago
quarter’s earnings.
Other restaurant companies like Krispy Kreme Doughnuts,
Inc. (KKD) with a Zacks Rank #1 (Strong Buy) and
Burger King Worldwide, Inc. (BKW) with a Zacks
Rank #2 (Buy) are expected to perform well, going ahead.
BURGER KING WWD (BKW): Free Stock Analysis Report
CRACKER BARREL (CBRL): Free Stock Analysis Report
KRISPY KREME (KKD): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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