Cracker Barrel Old Country Store, Inc. reported its financial results for the second quarter of fiscal 2017 ended January 27.
Second Quarter Fiscal 2017 Highlights
Compared to the prior year second quarter, comparable store restaurant sales increased 0.6 percent, marking the company's 11th consecutive quarter of positive comparable store restaurant sales.
Operating income as a percent of total revenue increased 150 basis points, over the prior year quarter, to 10.7 percent.
Commenting on the second quarter, Cracker Barrel president and chief executive officer Sandra B. Cochran says, "I am pleased to report another significant increase in earnings per diluted share. We delivered second quarter operating margin growth largely driven by continued commodity favorability and the success of our cost reduction initiatives. As we look to the second half of this fiscal year, our teams remain focused on executing at the store level, providing the great food, friendly service, welcoming atmosphere and retail shopping experience that differentiates our brand from our competitors."
Second Quarter Fiscal 2017 Results
The company reported total revenue of $772.7 million for the second quarter of fiscal 2017, representing an increase of 1.1 percent over the second quarter of the prior year. Comparable store restaurant sales increased 0.6 percent, including a 2.7 percent increase in average check partially offset by a 2.1 percent decrease in comparable store restaurant traffic. The average menu price increase for the quarter was approximately 2.1 percent. Comparable store retail sales decreased 2.2 percent from the prior year quarter.
Operating income in the second quarter was $82.7 million, or 10.7 percent of total revenue, an increase over the prior year quarter result of $70.5 million, or 9.2 percent of total revenue. As a percentage of total revenue, reductions in cost of goods sold, other store operating expenses, and general and administrative expenses were partially offset by an increase in labor and related expenses.
Diluted Earnings per Share
Earnings per diluted share were $2.19, compared to GAAP EPS of $2.01 in the prior year quarter, an increase of 9.0%. Adjusted for the impact of the prior year retroactive reinstatement of the Work Opportunity Tax Credit, earnings per diluted share increased 15 percent from adjusted EPS of $1.91 in the prior year quarter.
Fiscal 2017 Outlook
The company reaffirmed its previous earnings guidance and expects to report earnings per diluted share for the 2017 fiscal year between $8.10 and $8.25. The company now expects total revenue of approximately $2.95 billion, reflecting the expected opening of eight new Cracker Barrel stores and four new Holler & Dash Biscuit House restaurants. The company now expects comparable store restaurant sales of between 0.5 percent and 1 percent and comparable store retail sales of approximately -2.0 percent, reflecting the company's more cautious expectations for the second half of the fiscal year. The company expects food commodity deflation of approximately 4 percent for the year. The company projects an operating income margin in the range of 10 percent and 10.5 percent of total revenue for fiscal 2017. The company expects depreciation expense between $85 million and $87 million; net interest expense of approximately $15 million; and capital expenditures of approximately $125 million. The company anticipates an effective tax rate for fiscal 2017 of approximately 32 percent.
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