Cracker Barrel Old Country Store Inc
) second-quarter fiscal 2013 adjusted earnings of $1.43 per share
comfortably beat the Zacks Consensus Estimate of $1.24 by
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.
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 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
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
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.
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
The company is planning to launch 8 new Cracker Barrel stores
in fiscal 2013.
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
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.
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
Red Robin Gourmet Burgers Inc.
) adjusted earnings in the fourth quarter of 2012 was way ahead
of the Zacks Consensus Estimate as well as the year-ago quarter's
Other restaurant companies like
Krispy Kreme Doughnuts, Inc.
) with a Zacks Rank #1 (Strong Buy) and
Burger King Worldwide, Inc.
) with a Zacks Rank #2 (Buy) are expected to perform well, going
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