Cracker Barrel reported its earnings for the second fiscal quarter of 2018 on February 20, outperforming industry estimates and carrying forward momentum from the first quarter.
Restaurant and retail sales boomed for Cracker Barrel, which outperformed the casual dining industry as a whole during the quarter. Although foot traffic was down 0.9 percent compared to this quarter in 2017, comparable restaurant sales grew 1.1 percent. Retail sales bulged an additional half percent.
The chain, comprised of nearly 650 units in 45 states, received a boost from the Tax Cuts and Jobs Act of 2017 in the form of a $1.63 per share benefit, which pushed GAAP diluted earnings per share all the way to $3.79. Adjusted diluted earnings per share were $2.73, a 54-cent increase over Q2 in 2017. That figure significantly beat Wall Street expectations of $2.31 per share.
Cracker Barrel’s report shined on a check-by-check basis, but also when viewed through a company-wide lens. The average check was up 2 percent at restaurants nationwide, and net income soared nearly $40 million compared to this quarter last year. That’s largely due to the non-cash benefit of $25 million from recent tax reform, but Cracker Barrel has no reason to hang its head.
Revenue landed at $787.8 million during the quarter, 2 percent higher than total revenue reported in last year’s second quarter. Analysts were spot-on, having projected $787.26 million in revenue this quarter.
Despite meeting industry expectations and outperforming the casual dining industry, Cracker Barrel stock (CBRL) tumbled about 6 percent on Tuesday. In her company’s statement following the earnings release, CEO Sandra B. Cochran was positive, though, after a strong first half of the 2018 fiscal year.
"I am pleased that we delivered positive comparable store sales in both restaurant and retail, improved upon our first quarter sales results, and outperformed the casual dining industry,” Cochran said. “Our second quarter operating income margin was pressured by several factors such as expenses related to our initiatives and increased commodity inflation. Our teams continue to make meaningful progress on key business initiatives as we set the foundation for future growth."
The latest report led Cracker Barrel to set full-year profit guidance higher than expected. The company is aiming for full year revenue of $3.1 billion as opposed to projections of $3.05 billion.
Internal projected earnings per share indicate the brand’s confidence in 2018, too: the restaurant is expecting between $9.30 and $9.50 in earnings per share for the year, well above the consensus opinion of $9.11 per share.
As Cracker Barrel continues to grapple with Wall Street expectations in the third quarter, the casual comfort food staple is certainly a stock to watch. Over the last two quarters, at least, things have been heating up.