Cracker Barrel Old Country Store, Inc. has reported net income of $15.2 million, or $0.64 per diluted share for the third quarter of fiscal 2011, compared to net income of $14.4 million, or $0.61 per diluted share in the prior year quarter. Net income for the current quarter includes a benefit of $1.5 million, or $0.06 per diluted share, for gains on the sale of property, net of an impairment charge.
Third-Quarter Fiscal 2011 Results
Revenue
Total revenue for the third quarter of fiscal 2011 was $582.5 million, representing an increase of 0.7% from the third quarter of fiscal 2010. Comparable store restaurant sales decreased 0.3% in the quarter, as a 2.3% increase in average check was offset by a 2.6% decline in traffic. The average menu price increase for the quarter was approximately 1.9% compared with the same prior year period. Comparable store retail sales increased 0.1% for the quarter.
Comparable store restaurant and retail sales for the fiscal months of February, March and April were as follows:
| February | March | April | Third Quarter | ||||||||||||||||||
| Comparable restaurant traffic | -1.9 | % | -3.4 | % | -2.4 | % | -2.6 | % | |||||||||||||
| Average check | 1.9 | % | 1.9 | % | 2.8 | % | 2.3 | % | |||||||||||||
| Comparable restaurant sales | 0.0 | % | -1.5 | % | 0.4 | % | -0.3 | % | |||||||||||||
| Comparable retail sales | -1.6 | % | -2.3 | % | 3.2 | % | 0.1 | % | |||||||||||||
Operating Income
Operating income in the third quarter was $31.2 million, or 5.4% of total revenue, compared with $31.8 million, or 5.5% of total revenue in the prior year quarter. An increase in cost of goods sold as a percentage of revenue, due primarily to increases in food commodity prices, was offset by a reduction in general and administrative expenses, and the benefit of gains on store dispositions net of an impairment charge.
Commenting on the third-quarter results, Cracker Barrel Chairman and Chief Executive Officer Michael A. Woodhouse said, “We are disappointed in our results for the third quarter, as both restaurant and retail sales were below our forecast. Since many of our customers continue to feel the negative impact of economic conditions, we need to continue to focus our efforts on providing the great food, service, atmosphere and shopping experience that differentiates our brand. It’s still all about Pleasing People.”
Year-to-date Fiscal 2011 Results
Total revenue of $1.8 billion year-to-date for fiscal 2011 represented an increase of 1.6% over fiscal 2010. Comparable store restaurant sales increased 0.8%, including a 2.0% higher check. Comparable store retail sales increased 1.0%.
The Company reported net income of $67.7 million, or $2.85 per diluted share, compared with net income of $57.8 million, or $2.47 per diluted share, in fiscal 2010.
Year-to-date net cash provided by operating activities was $89.2 million, compared with $136.8 million in fiscal 2010, reflecting higher bonus payments paid in the current year for the prior year’s performance and timing differences in accounts payable payments and income taxes. Year-to-date the Company has repurchased 500,000 shares for $25.6 million including 300,000 shares in the third quarter for $14.6 million.
Updates Fiscal 2011 Outlook
The Company commented that its updated outlook for fiscal 2011 continues to reflect many assumptions, the accuracy of which is not yet known. Based on current trends and estimates, the Company presently expects fourth quarter fiscal 2011 total revenue to increase approximately 1.0 to 2.5% over revenue in the fourth quarter of fiscal 2010. The revenue increase reflects the opening of three new Cracker Barrel units during the fourth quarter (bringing full-year openings to eleven). Comparable store restaurant sales are projected to be approximately flat while comparable store retail sales are projected to increase between 1.0% and 3.0% in the fourth quarter. The Company expects fourth quarter fiscal 2011 operating income margin to be approximately 6.9% to 7.3% compared with 7.4% in the fourth quarter of fiscal 2010.
For the full fiscal year, depreciation is expected to be approximately $63 million, interest expense is estimated to be approximately $46 to $47 million, and diluted shares outstanding are expected to be in the range of 23.5 to 24.0 million. The Company expects its full-year 2011 effective tax rate to be between 27.5% and 28.0%. Based on the assumptions outlined above, full-year net income per diluted share for the 2011 fiscal year is projected to be between $3.80 and $3.90. The Company expects capital expenditures for fiscal 2011 to be between $85 and $90 million. As in fiscal 2010, the Company expects to repurchase shares solely to offset dilution that results from employee share issuances in fiscal 2011.
Commenting on the outlook, Mr. Woodhouse said, “Going into the fourth quarter of this year, we are focused on execution, making sure that our guests receive that Pleasing People experience every time they walk in the door. We’re also prepared for the important summer travel season with special menu offerings and an exciting retail assortment. For example, we’re bringing back popular summer favorites including barbecued ribs and chicken starting next week. Our brand promises honest value in a family-friendly setting and we remain committed to delivering on that promise.”
Cracker Barrel Old Country Store restaurants provide a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America’s country heritage…all at a fair price. The restaurants serve up delicious, home-style country food such as meatloaf and homemade chicken n’ dumplins as well as the Company’s signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences.
Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) was established in 1969 in Lebanon, Tenn. and operates 601 company-owned locations in 42 states. Every Cracker Barrel unit is open seven days a week with hours Sunday through Thursday, 6 a.m. – 10 p.m., and Friday and Saturday, 6 a.m. – 11 p.m.