Cracker Barrel Reports 35% Increase in Second-Quarter EPS

* Fully diluted income per share was $1.09 for the second quarter of fiscal 2010, an increase of 35% compared with the prior-year quarter

* Operating income margin in the second quarter was 7.8% of total revenue compared with 6.2% in the prior-year quarter

* Revenue for the second quarter increased 0.4% to $632.6 million

* Comparable store restaurant traffic outpaced the Knapp-Track™ Traffic Index for the fourteenth consecutive quarter

* Comparable store restaurant and retail sales decreased 0.2% and 3.0%, respectively

* Net cash flow from operating activities for the first six months of fiscal 2010 increased $36.4 million to $86.3 million compared with the prior-year comparable period

* Reduced long-term debt by $41.4 million in the second quarter

* Repurchased 205,000 shares in the second quarter

Cracker Barrel Old Country Store, Inc. (“Cracker Barrel,” or the “Company”) (Nasdaq: CBRL) today reported net income per diluted share of $1.09 for the second quarter of fiscal 2010, compared with $0.81 in the second quarter of fiscal 2009, an increase of 34.6%. Net income was $25.4 million compared with $18.4 million in the second quarter of fiscal 2009.

Second-Quarter Fiscal 2010 Results

Revenue from continuing operations

In the second quarter of fiscal 2010, total revenue of $632.6 million increased 0.4% from the second quarter of fiscal 2009. Comparable store restaurant sales for the period decreased 0.2%, including a 2.1% higher average check. The average menu price increase for the quarter was approximately 2.4%. Comparable store retail sales were down 3.0% for the quarter. During the quarter, the Company opened two new Cracker Barrel Old Country Store units, after having opened three in the first quarter. Since the end of the second quarter, the Company has opened one additional store.

Operating Income

In the second quarter of fiscal 2010, operating income of $49.4 million was 7.8% of total revenue compared with $39.3 million, or 6.2% of total revenue, in the second quarter of fiscal 2009. The increase in operating income was the result of lower food costs, lower retail markdowns and lower labor and related expenses partially offset by higher general and administrative expenses and impairment charges.

Commenting on the second-quarter results, Cracker Barrel Old Country Store, Inc. Chairman, President and Chief Executive Officer Michael A. Woodhouse said, “Our results reflect better execution in every part of the company. Our guest satisfaction scores continue to improve as we roll-out the Seat to Eat initiative, offer new menu choices and appealing products in our retail shops and continue our focus on providing a high-quality guest experience each and every time. Our guest traffic has now outperformed the Knapp-Track™ index for fourteen consecutive quarters.”

Year-to-date Fiscal 2010 Results

Total revenue from continuing operations of $1.2 billion year-to-date for fiscal 2010 represented an increase of 0.8% over fiscal 2009. Comparable store restaurant sales increased 0.2%, including a 2.0% higher check. Comparable store retail sales decreased 3.8%.

The Company reported net income of $43.4 million, or $1.87 per diluted share, compared with net income of $31.2 million, or $1.38 per diluted share, in fiscal 2009.

Year-to-date net cash flow provided by operating activities was $86.3 million, compared with $49.8 million in fiscal 2009, reflecting higher net income and continued improvements in working capital. The Company used a portion of the cash flow to reduce its long-term debt by $41.4 million. The Company also repurchased 205,000 shares during the second quarter.

Fiscal 2010 Outlook Update

The Company commented that its updated outlook for fiscal 2010 continues to reflect many assumptions, the accuracy of which is not yet known. Based on current trends and estimates, the Company presently expects fiscal 2010 total revenue to be in the range of flat to an increase of approximately 2.0% over revenue in fiscal 2009. The revenue increase reflects the expected opening of a total of six new Cracker Barrel units during the year, projected comparable store restaurant sales between a decrease of 0.5% to an increase of 1.0%, and comparable store retail sales between a decrease of 2.0% to flat. Depreciation for the year is expected to be $60 to $62 million. The Company expects fiscal 2010 operating income margin to be approximately 6.7% to 6.9% compared with 6.0% in fiscal 2009. Net interest expense is estimated to be $48 to $50 million, and diluted shares outstanding are expected to be in the range of 23 to 23.5 million. The Company expects its full year 2010 effective tax rate to be between 27.5% and 28.5%. Based on the assumptions outlined above, full-year net income per diluted share for the 2010 fiscal year is projected to be between $3.35 and $3.50. The Company expects capital expenditures for fiscal 2010 to be between $70 and $75 million.

Commenting on the outlook, Mr. Woodhouse said, “We’re very pleased with what we’ve done in these difficult times, and we’re proud of the fact that our trusted brand continues to offer great value in a family-friendly setting. Our execution is continuing to improve and it’s helping us sustain our top line and better manage the cost side of the business.”


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