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Cracker Barrel (CBRL) Q2 Earnings Top Estimates, Revenues Lag

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Cracker Barrel Old Country Store, Inc. CBRL reported mixed second-quarter fiscal 2022 (ended Jan 28, 2022) results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. Nevertheless, the top and the bottom line improved year over year.

Cracker Barrel president and CEO Sandra B. Cochran stated, "I am pleased that we once again delivered improved restaurant sales and strong retail sales despite the impact of rising COVID cases during the second quarter, and even more pleased to be welcoming back our guests who we believe are eager to return to more normalized routines of travel and visitation as Omicron fades and concerns about indoor dining continue to subside.”

Earnings & Revenues

The company’s fiscal second-quarter adjusted earnings per share (EPS) came in at $1.71, beating the Zacks Consensus Estimate of $1.62. In the prior-year quarter, the company had reported an adjusted EPS of 70 cents.

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

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

Cracker Barrel reported revenues of $862.3 million during the quarter under review, which missed the consensus mark of $870 million. The top line increased 27% on a year-over-year basis. The company benefited from improvement in both restaurant and retail comparable store sales.

Comps Details

Comparable store restaurant sales inched up 1.9% in the reported quarter compared with the same period in fiscal 2019. Comparable store restaurant sales jumped 25.9% year over year. Comparable retail sales jumped 13.7% and 32.5% compared with the same period in 2019 and 2021, respectively.

During the fiscal second quarter, comparable store off-premise sales soared 123% compared with the second quarter of fiscal 2019.

Operating Highlights

During the fiscal second quarter, the cost of goods sold (exclusive of depreciation and rent) came in at $283.6 million compared with $225.1 million reported in the prior-year quarter. As a percentage of total revenues, the cost of goods sold (exclusive of depreciation and rent) declined 30 basis points (bps) year over year to 32.9%. General and administrative expenses during the quarter came in at $43.5 million compared with $34 million reported in the prior-year quarter.

Adjusted operating income in the fiscal second quarter totaled $49.8 million compared with $17.6 million reported in the prior-year quarter. The adjusted operating margin was 5.8% compared with 2.6% 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 Jan 28, 2022, cash and cash equivalents were $79.7 million compared with $568.8 million as of Jan 29, 2021.

Inventory at the end of the fiscal second quarter amounted to $153.9 million, up from $134.8 million at the end of second-quarter fiscal 2021.

Long-term debt amounted to $327.4 million at the end of the quarter compared with $835 million at the end of the prior-year quarter.

For the six months ended Jan 28, 2022, net cash provided by operating activities was $107.8 million compared with $121.3 million reported in the year-ago period.

Fiscal 2022 Outlook

In the fiscal third quarter, the company anticipates total revenues of approximately $800 million. It anticipates elevated COVID case counts and seasonally lower demand patterns to act as a headwind. Adjusted operating margin in the fiscal third quarter is anticipated at approximately 5.0% of total revenues. Operating margins in the fiscal third quarter will continue to bear the impact of significant wage, commodity and other operating expenses inflation as well as higher expenses. For the fiscal third quarter, the company anticipates commodity inflation of approximately 15% and wage inflation of approximately 11-12%.

Capital expenditures for the second half of fiscal 2022 are anticipated at approximately $60 million. The effective tax rate for the second half of fiscal 2022 is anticipated to be nearly 14%. Going forward, the company expects to open two new Cracker Barrel locations and approximately nine to 11 Maple Street Biscuit Company locations.

Zacks Rank & Key Picks

Cracker Barrel currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Retail-Wholesale sector include Genesco Inc. GCO, Arcos Dorados Holdings Inc. ARCO and Tapestry, Inc. TPR.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Genesco sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 2,739.6%, on average. Shares of the company have increased 29.7% in the past year.

The Zacks Consensus Estimate for Genesco’s 2022 sales and EPS suggests growth of 35.3% and 673.7%, respectively, from the year-ago period’s levels.

Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have increased 31.3% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 33.2% and 118.1%, respectively, from the year-ago period’s levels.

Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 5.1% in the past year.

The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.6% and 22.9%, respectively, from the year-ago period’s levels.


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