Why Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL) stock is falling

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Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL) stock fell 4.61% after the company missed the earnings estimate for the fourth quarter of 2018. The company’s performance in the fourth quarter was challenged, as the softer traffic trends the company saw in May persisted in June and July, contrary to the expectations, resulting in performance that fell below the company’s expectations.

CBRL in the fourth quarter of FY 18 has reported the adjusted earnings per share of $2.19, missing the analysts’ estimates for the adjusted earnings per share of $2.66. The company had reported the adjusted revenue growth of 9.1 percent to $810.9 million in the fourth quarter of FY 18 from $743.23 million last year. Cracker Barrel comparable store restaurant sales decreased 0.4%, as a 3.1% increase in average check partially offset a 3.5% decrease in comparable store restaurant traffic. The average menu price increase for the quarter was approximately 2.7%. Comparable store retail sales increased 1.3% from the prior year quarter.

Moreover, Operating income in the fourth quarter was $82.8 million, or 10.2% of total revenue, a decrease from the prior year quarter of $83.2 million, or 11.2% of total revenue. As a percentage of total revenue, increases in cost of goods sold and labor and related expenses were partially offset by reductions in other operating expenses and general and administrative expenses

CBRL has entered into a five-year $950 million revolving line of credit. This new credit facility replaces the previous $750 million revolving line of credit.

CBRL has declared a quarterly dividend to common shareholders of $1.25 per share, payable on November 5th, 2018 to shareholders of record on October 19th, 2018.

For fiscal 2019, the Company expects total revenue of approximately $3.04 billion reflecting the expected opening of 8 new Cracker Barrel stores, as well as projected increases in comparable store restaurant sales growth in the range of flat to 1%, and comparable store retail sales growth in the range of flat to 1%. The Company projects food commodity inflation of approximately 2% for the year. The Company projects operating income margin to be approximately 9.3% as a percent of total revenue. The Company expects depreciation expense of between $110 million and $115 million; net interest expense of approximately $17 million; and capital expenditures of approximately $160 million to $170 million. The Company anticipates an effective tax rate for fiscal 2019 of between 17% and 18%. The Company projects earnings per diluted share for fiscal 2019 of between $8.95 and $9.10 compared to adjusted earnings per diluted share of $8.87 in fiscal 2018.


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