Cracker Barrel earnings were mixed. Cracker Barrel (Nasdaq: CBRL) today reported its financial results for the fourth quarter and for the fiscal year ended July 28, 2017. The Company also provided guidance for its 2018 fiscal year and first quarter:
Fourth Quarter Fiscal 2017 Highlights
Earnings per diluted share were $2.23 compared to diluted EPS of $2.12 in the prior year quarter.
Operating income as a percent of total revenue increased 80 basis points to 11.2%.
Comparable store traffic of -1.7% and restaurant sales of -0.8% outperformed the Casual Dining Industry.
Full Year Fiscal 2017 Highlights
Earnings per diluted share were $8.37 in fiscal 2017 compared to GAAP diluted EPS of $7.86 in the prior fiscal year. When adjusted for the retroactive reinstatement of the Work Opportunity Tax Credit (“WOTC”) and a reduction of the provisions for uncertain tax positions, adjusted earnings per diluted share in the prior year were $7.55.
Operating income for fiscal 2017 was 10.7% of total revenue, compared to prior year operating income of 9.6% of revenue.
Comparable store traffic of -1.4% and restaurant sales of 0.2% outperformed the Casual Dining Industry.
During fiscal 2017, the Company declared regular quarterly dividends totaling $4.65 per share. Additionally, the Company declared a special dividend of $3.50 per share, bringing the total dividends declared in fiscal 2017 to $8.15 per share.
Commenting on the full fiscal year results, Cracker Barrel (CBRL) President and Chief Executive Officer Sandra B. Cochran said, “We ended fiscal 2017 with solid operating income margin and earnings growth. Since fiscal 2014, when we laid out our three-year strategic plan, we have grown earnings per share by nearly fifty percent, well above our target growth. As we enter the new fiscal year, we anticipate the environment to remain challenged, yet are confident in our plans to invest in the long-term growth of the Company.”
Fourth Quarter Fiscal 2017 Results
The Company reported total revenue of $743.2 million for the fourth quarter of fiscal 2017, representing a decrease of 0.3% over the fourth quarter of the prior year. Comparable store restaurant sales decreased 0.8%, including a 1.7% decrease in store traffic partially offset by a 0.9% increase in average check. The average menu price increase for the quarter was approximately 1.4%. Comparable store retail sales decreased 4.4% for the quarter. The Company opened two new Cracker Barrel stores during the quarter bringing the combined Cracker Barrel and Holler & Dash store count to 649 locations at fiscal year-end.
Comparable store restaurant traffic, average check and comparable store restaurant sales and retail sales for the fiscal months of May, June and July and the fourth quarter were lower.
Operating income in the fourth quarter was $83.2 million, or 11.2% of total revenue. Operating income in the prior year quarter was 10.4% of total revenue. As a percentage of total revenue, favorability in cost of goods sold and labor and related expenses were partially offset by an increase in store operating expenses.
Fiscal 2017 Results
The Company reported total revenue of $2.93 billion for the fiscal year, representing an increase of 0.5% over the prior year. Comparable store restaurant sales increased 0.2%, including a 1.6% increase in average check partially offset by a 1.4% decrease in store traffic. Comparable store retail sales were down 3.7% for the fiscal year.
Operating income for fiscal 2017 was $313.2 million, or 10.7% of total revenue, compared to $280.5 million, or 9.6% of total revenue, in the prior year quarter.
Earnings per diluted share were $8.37, a 6.5% increase over GAAP EPS of $7.86 in the prior year quarter. Adjusted for the impact of the retroactive reinstatement of the Work Opportunity Tax Credit (“WOTC”) and a reduction of the provisions for uncertain tax positions, earnings per diluted share increased 10.9% from adjusted EPS of $7.55 in the prior year quarter. (For a reconciliation of GAAP to non-GAAP financial measures, please see the tables accompanying this release.)
Fiscal 2018 Outlook
For fiscal 2018, the Company expects total revenue of approximately $3.1 billion reflecting the expected opening of eight or nine new Cracker Barrel stores and three or four new Holler & Dash stores, as well as projected increases in comparable store restaurant sales in the range of 2.5% to 3.5%, and comparable store retail sales in the range of 0.0% to 1.0%. The Company projects food commodity inflation of approximately 1.5% for the year. The Company projects operating income margin to be relatively flat to the prior year as a percent of total revenue. The Company expects depreciation expense between $95 million and $100 million; net interest expense in the range of $16 million to $17 million; and capital expenditures of approximately $150 million to $160 million. The Company anticipates an effective tax rate for fiscal 2018 of between 31% and 32%. The Company expects to report earnings per diluted share for fiscal 2018 of between $8.85 and $9.00.
The Company’s 2018 fiscal year is a 53-week year. The Company estimates the impact of the 53rd week, which is included in its guidance, to contribute earnings per diluted share of approximately $0.30.
For the first quarter of fiscal 2018, the Company expects to report earnings per diluted share of between $1.85 and $1.95.
The fiscal 2018 and first quarter estimates do not include any financial implications of Hurricane Harvey and Hurricane Irma. Given the recency of these events and the ongoing nature of relief efforts, the Company is still determining the extent of the financial impact. The Company reminds investors that its outlook for fiscal 2018 reflects a number of assumptions, many of which are outside the Company’s control.