Cracker Barrel (CBRL) Q1 Earnings Miss, Revenues Top Estimates

Cracker Barrel Old Country Store, Inc. CBRL reported mixed first-quarter fiscal 2022 (ended Oct 29, 2021) results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. However, both the top and bottom lines improved year over year.

The company benefited from robust comparable store restaurant sales, average weekly sales volumes improvement on account of increase in dine-in traffic, retained off-premise volumes, and robust retail performance.

Cracker Barrel president and CEO Sandra B. Cochran said, “I'm pleased with the improvement we saw in our first quarter comparable restaurant sales and the continued strength of our retail sales. The progress we made on staffing and the incredible efforts of our operating teams contributed significantly to our sales results in the first quarter and positioned us well for the important holiday season and our second quarter generally. Although we still face an uncertain business environment, our sales trends give us confidence that we should see further improvement in our comparable store sales in the second quarter.”

Earnings & Revenues

The company’s fiscal first-quarter adjusted earnings per share of $1.52 lagged the Zacks Consensus Estimate of $1.63. In the prior-year quarter, the company had reported an adjusted earnings per share of 69 cents.

Cracker Barrel reported revenues of $784.9 million during the quarter under review, which surpassed the consensus mark of $773 million. However, the top line improved 21% on a year-over-year basis. The company benefited from improvement in both restaurant and retail comparable store sales.

Cracker Barrel Old Country Store, Inc. Price, Consensus and EPS Surprise

Cracker Barrel Old Country Store, Inc. price-consensus-eps-surprise-chart | Cracker Barrel Old Country Store, Inc. Quote

Comps Details

Comparable store restaurant sales increased 1.4% in the reported quarter compared with the same period in fiscal 2019. Comparable store restaurant sales jumped 19% year over year. Comparable retail sales jumped 17.6% and 29.1%, compared with the same period in 2019 and 2021, respectively.

During the fiscal first quarter, comparable store off-premise sales soared 168% compared with the first quarter of 2019.

Operating Highlights

During the fiscal first quarter, cost of goods sold (exclusive of depreciation and rent) increased 10 basis points (bps) year over year to 30.9%. General and administrative expenses contracted 90 bps year over year to 5.2%.

Adjusted operating income in the fiscal first quarter totaled $46.1 million compared with $27.7 million in the prior-year quarter. Adjusted operating margin was 5.9%, compared with 4.3% in the prior-year quarter. This can be attributed to better-than-expected sales performance, particularly in the company’s retail business.

Balance Sheet

As of Oct 29, 2021, cash and cash equivalents were $125.9 million, compared with $597.7 million as of Oct 30, 2020.

Inventory at the end of the fiscal first quarter amounted to $159.6 million, down from $155.7 million at the end of first-quarter fiscal 2021.

Long-term debt amounted to $377 million at the end of the quarter, up from $910 million at the end of the prior-year quarter.

For the three-months ended Oct 29, 2021, net cash provided by operating activities was $23 million compared with $57 million in the year-ago period.

Q2 Outlook

Going forward, the company expects improvement in sales. It anticipates fiscal second-quarter comparable store restaurant sales growth compared with fiscal 2019. Comparable store restaurant sales growth is anticipated to be higher than first-quarter fiscal 2022. Operating margin in the fiscal second quarter is expected to be 5.5-6%. Operating margins in the fiscal second quarter will continue to bear the impact of significant wage, commodity, and other operating expenses inflation, and higher expenses.

Fiscal 2022 Outlook

The company anticipates capital expenditure of nearly $120 million. Commodity inflation and constant mix wage inflation is expected to be in the high-single digits. Meanwhile, the effective tax rate for the fiscal second quarter is anticipated to be nearly 17%.

The company expects to open three new Cracker Barrel locations and 15 new Maple Street Biscuit Company locations.

Cracker Barrel currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Papa John’s International, Inc. PZZA reported robust third-quarter fiscal 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. During the fiscal third quarter, the company reported adjusted earnings of 83 cents per share, which beat the Zacks Consensus Estimate of 69 cents by 20.3%. The bottom line surged 137.1% from 35 cents in the prior-year quarter. Quarterly revenues of $512.8 million outpaced the consensus mark of $501 million by 2.3%. The top line increased 8.4% on a year-over-year basis.

Papa John’s benefited from solid comparable sales in North America, driven by strong customer retention and innovation strategies. The company witnessed a rise in company-owned restaurant revenues, franchise royalties and commissary sales. International revenues benefited from higher franchise royalties and unit growth. This Zacks Rank #2 (Buy) company’s shares have gained 41% in the past six months compared with the industry’s growth of 2.2%.

The Cheesecake Factory Incorporated CAKE reported third-quarter fiscal 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. In the quarter under review, adjusted earnings per share (EPS) was 65 cents, which lagged the Zacks Consensus Estimate of 70 cents. In the prior-year quarter, the company had reported an adjusted loss of 33 cents per share. This was primarily due to a rise in labor and other operating expenses.

Cheesecake Factory gained from a solid off-premise sales growth. Quarter-to-date (through Nov 2), the off-premise model contributed 28% to total sales. Shares of the company have declined 25.3% in the past six months, against the industry’s growth of 2.2%. Cheesecake Factory has a Zacks Rank #3 (Hold).

YUM! Brands, Inc. YUM reported strong third-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics improved year over year. During third-quarter 2021, the company’s adjusted earnings of $1.22 beat the Zacks Consensus Estimate of $1.06. In the prior-year quarter, the company had reported an adjusted earnings of $1.01. Quarterly revenues of $1,606 million outpaced the consensus mark of $1,584 million. The top line improved 11% year over year.

YUM! Brands’ results in the quarter benefited from strong digital sales, robust unit development and a diversified global business model. The company strengthened its digital capabilities with the acquisition of Dragontail, which provides AI-based integrated kitchen order management and delivery technologies. The initiative paves the path for strengthening store operations and enhancing customer experience. During the third quarter, it reported digital sales of more than $5 billion. Shares of this Zacks Rank #3 company have gained 5.8% in the past six months.

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