Cracker Barrel Old Country Store Inc. reported financial results Tuesday for the second quarter that ended Jan. 31.
Compared to the prior-year second quarter, comparable store restaurant sales decreased 0.6 percent and comparable store retail sales decreased 3 percent. Company officials said the extreme winter weather during the quarter negatively impacted restaurant and retail sales by about 2.5 percent.
“The unusually severe winter weather significantly impacted our store traffic and sales,” said Cracker Barrel President and Chief Executive Officer Sandra B. Cochran. “Holiday travelers are an important part of our customer base during the second quarter, and we believe that the inclement weather reduced travel visits. I am pleased with the performance of our field teams, who helped preserve our operating margins by controlling costs during periods of unpredictable customer traffic. I am also pleased that we outperformed the traffic and sales of our peers in the Knapp-Track casual dining index during this time of continued economic uncertainty and severe weather.”
Cracker Barrel reported $698.5 million in total revenue during the second quarter, which represented a 0.6 percent decrease compared the second quarter of the prior year. Comparable store restaurant sales decreased 0.6 percent, including 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 decreased 3 percent for the quarter. The company opened one store since the end of the second quarter, for a total of two new store openings year-to-date.
GAAP operating income in the second quarter was $58.7 million, or 8.4 percent of total revenue. Adjusted for proxy contest expenses, adjusted operating income was $59.1 million, or 8.5 percent of total revenue, compared with adjusted operating income of $58.9 million, or 8.4 percent of total revenue, in the prior year quarter. Reductions in labor and related expenses and general and administrative expenses were partially offset by an increase in other store operating expenses.
On a GAAP basis, earnings per diluted share in the second quarter of fiscal 2014 were $1.55, compared with $1.47 in the prior year quarter. Adjusted for proxy contest expenses, adjusted earnings per diluted share were $1.56, compared with adjusted earnings per diluted share of $1.43 in the prior year quarter.
Based upon year-to-date financial performance, the company re-affirmed its previous earnings guidance and expects to report earnings per diluted share of between $5.60 and $5.80. Cracker Barrel officials said they expect full-year earnings to be close to the midpoint of this range.
For fiscal 2014, the company now expects total revenue of about $2.7 billion and an operating income margin of about 8 percent. The revenue projection for fiscal 2014 reflects the expected opening of seven new Cracker Barrel stores, projected increases in comparable store restaurant sales of between 1 percent-2 percent, and about flat comparable store retail sales. The company’s projections are based upon expected food commodity inflation of about 2 percend for the year; depreciation expense between $68 million and $70 million; net interest expense between $16 million and $18 million; and an effective tax rate of between 31 percent-32 percent. Cracker Barrel expects capital expenditures during fiscal 2014 to be between $90 million and $100 million.
The company expects to report earnings per diluted share for the third quarter of between $1.20 and $1.30. The company said its guidance assumes normal weather patterns for the balance of the third quarter and does not include expenses related to the proxy contest at its annual shareholders meeting held in November 2013 or expenses associated with the special shareholders meeting scheduled for April 23.
Cracker Barrel was established in 1969 in Lebanon and operates 626 company-owned locations in 42 states.