Cracker Barrel Old Country Store Inc. reported financial results Wednesday for its third quarter of 2014 that showed gains despite challenges from weather conditions and other factors.
Cracker Barrel had its 10th consecutive quarter of outperformance of the Knapp-Track casual dining index, and total sales increased 0.5 percent compared to the same time last year. Comparable store retail sales increased 0.9 percent, but comparable store restaurant sales decreased 0.6 percent.
“Like many in our industry, Cracker Barrel continued to face headwinds during the quarter from severe winter weather, a challenging consumer environment and an increasingly promotional competitive landscape,” said President and Chief Executive Officer Sandra Cochran. “Nevertheless, we continued to outperform our peers in the Knapp-Track casual dining index for the 10th consecutive quarter, while our field teams focused on controlling costs and preserving our operating margins.”
Operating income margin was 7 percent of total revenue, or 7.2 percent when adjusted for expenses associated with a special meeting of Cracker Barrel shareholders in April, compared with 6.9 percent in the prior year quarter.
Earnings per diluted share were $1.20, or $1.23 when adjusted for special meeting expenses, a 20.6-percent increase over earnings per diluted share of $1.02 in the prior year quarter.
The Cracker Barrel board previously approved a quarterly dividend increase of 33 percent to $1 per share.
The Lebanon-based company reported $643.3 million in total revenue for the third quarter that ended May 2, representing an increase of 0.5 percent over the third quarter of the prior year. Comparable store restaurant sales decreased 0.6 percent, as a 2.9 percent decline in customer traffic was partially offset by a 2.3 percent increase in average check.
The average menu price increase for the quarter was about 1.8 percent. Comparable store retail sales increased 0.9 percent for the quarter. The company opened two stores during the third quarter, for a total of three new store openings in 2014.
GAAP operating income in the third quarter was $45.2 million, or 7.0 percent, of total revenue. Adjusted for special meeting expenses, adjusted operating income was $46.3 million, or 7.2 percent, of total revenue, compared with operating income of $44.2 million, or 6.9 percent, of total revenue in the prior year quarter. Reductions in cost of goods sold and general and administrative expenses as a percent of total revenue were partially offset by an increase in other store operating expenses.
Based on year-to-date financial performance, Cracker Barrel expects to report earnings per diluted share for the 2014 fiscal year of between $5.50 and $5.60, which implies adjusted EPS for the fourth quarter of between $1.50 and $1.60. Company officials now expect total revenue for the year of about $2.7 billion and an operating income margin between 7.7 percent-7.9 percent of total revenue. The revenue projection for fiscal 2014 reflects the expected opening of seven new Cracker Barrel stores, projected increases in comparable store restaurant sales of about 0.5 percent, and near flat comparable store retail sales.
Cracker Barrel’s projections are based upon expected food commodity inflation of about 2 percent for the year, and 2.5 percent for the fourth quarter.
The company expects an annual depreciation expense between $68 million-$70 million; net interest expense between $17 million-$18 million; and an effective tax rate of between 31 percent-32 percent. Cracker Barrel officials expect capital expenditures for fiscal 2014 to be between $90 million-$100 million.
A live broadcast of Cracker Barrel’s quarterly conference call was made available to the public online at investor.crackerbarrel.com on Wednesday at 10 a.m. An online replay was released Wednesday at 1 p.m. and will continue through June 11.
Cracker Barrel was established in 1969 in Lebanon and operates 627 company-owned locations in 42 states. Every Cracker Barrel store is open seven days a week. For more information, visit crackerbarrel.com.