Cracker Barrel Q1 2016 Comparable Store Restaurant Sales Increased 2.5 Percent
Operating income margin was 9.3% of total revenue, compared to 8.1% in the prior year quarter.
Cracker Barrel Old Country Store, Inc. (Nasdaq:CBRL) today reported financial results for the first quarter of fiscal 2016 ended October 30, 2015.
First Quarter Fiscal 2016 Highlights
- Compared to the prior year first quarter, comparable store restaurant sales increased 2.5% and comparable store retail sales increased 2.4%.
- Operating income margin was 9.3% of total revenue, compared to 8.1% in the prior year quarter.
- Earnings per diluted share were $1.70, a 19.7% increase compared to EPS of $1.42 in the prior year quarter.
Commenting on the first quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, “Thanks to the continued success of our cost reduction initiatives, we were able to deliver strong EPS growth for our shareholders in the first quarter. Nevertheless, we believe consumer spending was challenged during the quarter, particularly in October, and that this was reflected in our comparable store traffic and sales. Even in this challenging environment, we believe we have the right menu, marketing, and margin-driving initiatives in place to achieve continued success in fiscal 2016."
First Quarter Fiscal 2016 Results
Revenue
The Company reported total revenue of $702.6 million for the first quarter of fiscal 2016, representing an increase of 2.8% over the first quarter of the prior year. Comparable store restaurant sales increased 2.5%, as a 3.2% increase in average check was partially offset by a 0.7% reduction in traffic. The average menu price increase for the quarter was approximately 2.8%. Comparable store retail sales increased 2.4% for the quarter.
Comparable store restaurant traffic, average check and comparable store restaurant and retail sales for the fiscal months of August, September and October and for the first quarter were as follows:
August | September | October | First Quarter | |||||
Comparable restaurant traffic | 0.1% | 0.4% | -2.1% | -0.7% | ||||
Average check | 2.6% | 3.6% | 3.3% | 3.2% | ||||
Comparable restaurant sales | 2.7% | 4.0% | 1.2% | 2.5% | ||||
Comparable retail sales | -1.2% | 1.5% | 5.6% | 2.4% | ||||
Operating Income
Operating income was $65.3 million, or 9.3% of total revenue, in the first quarter of fiscal 2016 compared with $55.4 million, or 8.1% of total revenue, in the first quarter of fiscal 2015. As a percentage of total revenue, reductions in cost of goods sold and labor and related expenses were partially offset by an increase in other store operating expenses.
Diluted Earnings per Share
Earnings per diluted share in the first quarter of fiscal 2016 were $1.70, compared to earnings per diluted share of $1.42 in the prior year quarter, an increase of 19.7%.
Fiscal 2016 Outlook
The Company reaffirmed its previous earnings guidance and expects to report earnings per diluted share for the 2016 fiscal year between $7.15 and $7.30. The Company expects to report increases in comparable store restaurant sales and comparable store retail sales in the range of 2.0% to 3.0%. The Company expects total revenue of between $2.90 billion and $2.95 billion, reflecting the expected opening of seven new Cracker Barrel stores during the fiscal year. The Company projects food commodity inflation in the range of 2.5% to 3.0% for the fiscal year, driven largely by expected increases in egg prices. The Company projects an operating income margin of between 9.0% and 9.5% of total revenue for fiscal 2016. The Company expects depreciation expense between $76 million and $77 million; net interest expense between $14 million and $15 million; and capital expenditures of approximately $110 million. The Company expects an effective tax rate for fiscal 2016 of between 31% and 32%.
The Company expects to report earnings per diluted share for the second quarter of 2016 of between $1.80 and $1.90. The Company reminds investors that its outlook for fiscal 2016 reflects a number of assumptions, many of which are outside the Company’s control.
About Cracker Barrel Old Country Store®
Cracker Barrel Old Country Store provides 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 our 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 635 company-owned locations in 42 states. Every Cracker Barrel store 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.
CRACKER BARREL OLD COUNTRY STORE, INC. | ||||||
First Quarter Ended | ||||||
10/30/2015 | 10/31/2014 | Percentage | ||||
Total revenue | $702,629 | $683,428 | 3% | |||
Cost of goods sold, exclusive of depreciation and rent | 222,973 | 222,295 | 0 | |||
Labor and other related expenses | 244,322 | 242,327 | 1 | |||
Other store operating expenses | 135,707 | 130,172 | 4 | |||
Store operating income | 99,627 | 88,634 | 12 | |||
General and administrative expenses | 34,319 | 33,192 | 3 | |||
Operating income | 65,308 | 55,442 | 18 | |||
Interest expense | 3,544 | 4,424 | (20) | |||
Pretax income | 61,764 | 51,018 | 21 | |||
Provision for income taxes | 20,899 | 16,994 | 23 | |||
Net income | $40,865 | $34,024 | 20 | |||
Earnings per share – Basic: | $1.71 | $1.43 | 20 | |||
Earnings per share – Diluted: | $1.70 | $1.42 | 20 | |||
Weighted average shares: | ||||||
Basic | 23,956,554 | 23,862,195 | 0 | |||
Diluted | 24,073,052 | 24,001,438 | 0 | |||
Ratio Analysis | ||||||
Total revenue: | ||||||
Restaurant | 80.0% | 80.0% | ||||
Retail | 20.0 | 20.0 | ||||
Total revenue | 100.0 | 100.0 | ||||
Cost of goods sold, exclusive of depreciation and rent | 31.7 | 32.5 | ||||
Labor and other related expenses | 34.8 | 35.5 | ||||
Other store operating expenses | 19.3 | 19.0 | ||||
Store operating income | 14.2 | 13.0 | ||||
General and administrative expenses | 4.9 | 4.9 | ||||
Operating income | 9.3 | 8.1 | ||||
Interest expense | 0.5 | 0.6 | ||||
Pretax income | 8.8 | 7.5 | ||||
Provision for income taxes | 3.0 | 2.5 | ||||
Net income | 5.8% | 5.0% | ||||
CRACKER BARREL OLD COUNTRY STORE, INC. | ||||||
10/30/2015 | 10/31/2014 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 127,540 | $ | 105,851 | ||
Accounts receivable | 18,070 | 15,672 | ||||
Inventory | 186,230 | 177,741 | ||||
Prepaid expenses | 18,107 | 16,603 | ||||
Deferred income taxes | 5,960 | 6,613 | ||||
Property and equipment, net | 1,049,597 | 1,041,206 | ||||
Other long-term assets | 63,686 | 60,341 | ||||
Total assets | $ | 1,469,190 | $ | 1,424,027 | ||
Liabilities and Shareholders’ Equity | ||||||
Accounts payable | $ | 113,268 | $ | 92,401 | ||
Other current liabilities | 230,453 | 237,931 | ||||
Long-term debt | 400,000 | 368,750 | ||||
Interest rate swap liability | 11,206 | 5,388 | ||||
Other long-term obligations | 132,607 | 124,365 | ||||
Deferred income taxes | 48,147 | 57,031 | ||||
Shareholders’ equity, net | 533,509 | 538,161 | ||||
Total liabilities and shareholders’ equity | $ | 1,469,190 | $ | 1,424,027 | ||
Common shares issued and outstanding | 23,929,609 | 23,905,172 | ||||
CRACKER BARREL OLD COUNTRY STORE, INC. | ||||
Three Months Ended | ||||
10/30/2015 | 10/31/2014 | |||
Cash flows from operating activities: | ||||
Net income | $40,865 | $34,024 | ||
Depreciation and amortization | 18,687 | 17,511 | ||
Loss on disposition of property and equipment | 1,425 | 2,170 | ||
Share-based compensation, net of excess tax benefit | 32 | 772 | ||
(Increase) in inventories | (33,172) | (12,315) | ||
(Decrease) in accounts payable | (19,849) | (6,076) | ||
Net changes in other assets and liabilities | (12,343) | 643 | ||
Net cash (used in) provided by operating activities | (4,355) | 36,729 | ||
Cash flows from investing activities: | ||||
Purchase of property and equipment, net of insurance recoveries | (17,016) | (18,419) | ||
Proceeds from sale of property and equipment | 45 | 1,007 | ||
Net cash (used in) investing activities | (16,971) | (17,412) | ||
Cash flows from financing activities: | ||||
Net payments for credit facilities and other long-term obligations | 0 | (6,250) | ||
(Taxes withheld) from exercise of share-based compensation awards, net | (5,243) | (4,719) | ||
Excess tax benefit from share-based compensation | 1,920 | 1,963 | ||
Purchases and retirement of common stock | (14,653) | 0 | ||
Dividends on common stock | (98,613) | (23,821) | ||
Net cash (used in) financing activities | (116,589) | (32,827) | ||
Net (decrease) in cash and cash equivalents | (137,915) | (13,510) | ||
Cash and cash equivalents, beginning of period | 265,455 | 119,361 | ||
Cash and cash equivalents, end of period | $127,540 | $105,851 | ||
CRACKER BARREL OLD COUNTRY STORE, INC. | ||||
First Quarter Ended | ||||
10/30/2015 | 10/31/2014 | |||
Units in operation: | ||||
Open at beginning of period | 637 | 631 | ||
(Closed) opened during period | (2) | 2 | ||
Open at end of period | 635 | 633 | ||
Total revenue: (In thousands) | ||||
Restaurant | $562,279 | $546,707 | ||
Retail | 140,350 | 136,721 | ||
Total revenue | $702,629 | $683,428 | ||
Cost of goods sold: (In thousands) | ||||
Restaurant | $154,790 | $153,418 | ||
Retail | 68,183 | 68,877 | ||
Total cost of goods sold | $222,973 | $222,295 | ||
Average unit volume: (In thousands) | ||||
Restaurant | $883.2 | $864.3 | ||
Retail | 220.5 | 216.2 | ||
Total | $1,103.7 | $1,080.5 | ||
Operating weeks: | 8,276 | 8,223 | ||