Cracker Barrel Q1 Profit Up 17%, Results Beat View; Reiterates 2014 Outlook

(RTTNews) - Cracker Barrel Old Country Store, Inc. (CBRL) on Tuesday reported a 17 percent increase in profit for the first quarter from last year, reflecting higher comparable store sales that offset lower margins as well as a slight decline in comparable restaurant traffic.

Both revenue and adjusted earnings per share for the quarter beat analysts' estimates. Looking ahead, the company forecast earnings for the second quarter below Street expectations, but reiterated its financial outlook for fiscal 2014.

The Lebanon, Tennessee-based company operates the Cracker Barrel Old Country Store restaurant and retail concept.

Sandra Cochran, president and chief executive officer said, "Although the government shutdown challenged our consumer and added to an already difficult environment, this quarter's financial results exceeded our expectations and reflect our initial success in executing our business priorities for fiscal 2014."

Comparable restaurant traffic for the quarter edged down 0.1 percent. According to the company, the 16-day partial shutdown of the federal government in October had a negative impact on comparable store traffic and sales of between 20 and 30 basis points for the quarter.

However, comparable store restaurant sales for the quarter rose 2.8 percent, including a 2.9 percent increase in average check. The average menu price increase for the quarter was about 2.5 percent. Comparable store retail sales increased 2.5 percent for the quarter.

Cracker Barrel's net income for the first quarter was $27.16 million or $1.14 per share, up from $23.19 million or $0.97 per share in the year-ago period.

Excluding proxy contest expenses, adjusted earnings for the quarter were $1.22 per share, compared to $1.08 per share in the prior-year quarter. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $1.13 per share for the quarter. Analysts' estimates typically exclude special items.

Earlier in November, Cracker Barrel's shareholders elected all the company's nominees to the board of directors, rejecting both Sardar Biglari and Phil Cooley as directors.

Shareholders also rejected a non-binding, advisory proposal on a $20 per share special dividend that was publicly proposed by affiliates of Biglari Holdings. Sardar Biglari is an activist investor and the company's largest shareholder.

Total revenue for the first quarter rose 4 percent to $649.14 million from $627.45 million in the year-ago period. Analysts had a consensus revenue estimate of $646.72 million.

Gross margin for the quarter was 68.3 percent, compared to 68.5 percent in the year-ago period. Operating margin declined to 6.8 percent from 7.2 percent in the prior-year quarter.

Looking ahead to the second quarter, Cracker Barrel forecasts earnings in a range of $1.50 to $1.60 per share, excluding expenses related to the proxy contest. Analysts expect the company to report earnings of $1.65 per share for the quarter.

For fiscal 2014, Cracker Barrel reiterated its outlook for earnings per share in a range of $5.60 to $5.80 and revenues between $2.70 billion and $2.75 billion. Analysts expect the company to report earnings of $5.76 per share for the year on revenues of $2.73 billion.

The revenue projection for fiscal 2014 reflects the expected opening of seven or eight new Cracker Barrel stores, and projected increases in comparable store restaurant sales and retail sales in a range of 2 percent to 3 percent.

CBRL closed Monday's regular trading session at $118.12. In Tuesday's pre-market, the stock is down $1.12 or 0.95 percent to $117.00.