Cracker Barrel Old Country Store Inc
) reported third-quarter 2012 adjusted earnings of 86 cents per
share, comfortably beating the Zacks Consensus Estimate of 74
cents as well as the prior-year earnings of 58 cents per share.
Quarterly earnings exclude severance and other charges related to
operational restructuring.The better-than-expected results were
driven by top-line and comps growth.
On a GAAP basis, the company reported earnings of 81 cents per
share compared with the year-ago quarter earnings of 64 cents per
share. Total revenue of the company remained climbed 4.5% year over
year to $608.5 million, thanks to comps and unit growth.
Restaurant revenue and retail revenue jumped 5% and 2.2% to
$500.0 million and $108.5 million, respectively.
On a comparable basis, restaurant sales rose 3.1% due to a 0.6%
upside in traffic, 2.5% increase in average check and a 2.4% rise
in menu prices. Comparable retail sales in the quarter also crept
Gross margin in the quarter plunged to 68.8% from 69.1% in the
year-ago quarter, based on higher cost of goods sold (up 0.3%).
However, operating margin expanded 170 basis points (bps) year over
year to 6.7% in the quarter, attributable to 40 bps slide in labor
and related expense and 120 bps decrease in other store operating
expenses and 10 bps dip in general and administrative expenses.
During the quarter, Cracker Barrel opened 5 new restaurants.
Thus, at the end of the third quarter, the company had 613 owned
In 2012, Cracker Barrel plans to open 13 new units.
At the end of third quarter of 2012, Cracker Barrel had cash and
cash equivalents of approximately $127.3 million compared with
$52.3 million in fiscal 2011. The company also reduced its
long-term debt to $536.0 million from $550.1 million in 2011.
Cracker Barrel has also recently hiked its quarterly dividend by
15 cents to 40 cents per share. This translates into a 60.0%
increase from the prior dividend. The dividend will be paid on
August 6, 2012 to the stockholders of record as of July 20,
For 2012, the company continues to expect total revenue in the
range of $2.55 billion to $2.6 billion and comparable restaurant
and retail sales to be up 1.5% to 2.0%. However, based on third
quarter results and rising sales, the company again raised its
adjusted earnings per share projection to $4.35 to $4.45 from the
earlier estimate of $4.20 to $4.35. Cracker Barrel expects
commodity cost pressure to continue in 2012 and foresee inflation
of 5.0%-5.5%. Operating margin is estimated to be in the
single-digit range of 7.4% to 7.6%.
The Lebanon, Tennessee-based company expects earnings per share
in the range of $4.50 to $4.70 in 2013.
We expect estimates to go up in the coming days, as the company
reported better-than-expected earnings results and raised its
earnings outlook for 2012. Cracker Barrel remains focused on
enhancing shareholder value and ensuring growth of the company in
the long term based on three strategies - increasing the core
business, unit growth and extending the Cracker Barrel brand. In
the near term, the company is taking several initiatives like media
spending, refined menu and pricing strategies and improved
restaurant operations and services to drive traffic and sales.
Moreover, the company continues to make efforts to control
cost. However, cost inflation and uncertain economic
conditions, which result in lower traffic, remain challenges going
Cracker Barrel, which competes with
), currently retains a Zacks #3 Rank (short-term Hold rating). We
also reiterate our long-term Neutral recommendation on the
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