Cracker Barrel Old Country Store (CBRL, Financial) recently reported financial results for the fourth quarter 2014 that topped the analysts’ estimates on both the top and bottom lines. Its net profit for the fourth quarter increased 14% due to higher menu prices and effective cost control measures that helped the company to offset the lower traffic in its restaurants and stores across the region. Also, its operating income rose approximately 10%, representing a 60 basis point progress for the quarter.
Financial details
Cracker Barrel for the fourth-quarter posted revenue of $692.7 million, an uptick of almost 3% as compared to $674.1 million in the same quarter last year. Its top line performance also exceeded $686.4 million anticipated by analysts for the quarter. It posted earnings of $1.63 per share as against earnings of $1.43 per share in the corresponding period last year. Its earnings also surpassed the $1.56 earnings per share estimated by the consensus for the quarter.
Looking forward, Cracker Barrel also provided its full year outlook. It sees its revenue for the full year to be in the range of $2.75 billion to $2.80 billion. It also expects its earnings per share to range between $5.80 and $5.95 per share for the full year. The company expects its same-store sales for its restaurants and retail sales to increase about 2-3% for the full year. It also provided earnings forecasts for the first-quarter fiscal 2015. The company sees its earnings per diluted share to be in the range of $1.20 to $1.30 per share.
Expansion moves worth noting
In fiscal 2015, Cracker Barrel plans to make various smart moves such as opening up 6 or 7 new stores, executing cost control measures and introducing a new menu category in order to outspread the reach of Cracker Barrel brand. These strategic moves should drive its traffic and sales for both its restaurant and retail businesses going forward. It is also practicing various initiatives such as elevating average guest check through application of geographic pricing tiers, putting on various innovative technology and process up-gradation that should improvise its operating margins this fiscal year.
Cracker Barrel opened four new retail stores and its licensed product line for sales through grocery and other retail channels under our new mark, CB Old Country Store. It inaugurated seven new Cracker Barrel stores during the fiscal 2014. It has a total of 633 retail stores. It is observing positive sales momentum for its retail shops with the addition of sliced-to-order deli meat to its line of products. It’s seeing an elevated movement for its jerky in its retail shops.
Moreover, Cracker Barrel has partnered with major grocery retailers that should assist the company to better market its beef jerky in its new summer sausage and large promotional efforts this fall. Additionally, the company should benefit from the partnership of second licensee. It will support its entry into additional food lines. Cracker Barrel is planning to soon announce this partnership and looks forwards to a better performance this fiscal. Also, the company is seeing positive traction in these new stores that should augment its sales for the first-quarter. Its same store sales during the reported quarter increased approximately 2.6%.
New menu options are a positive
Cracker Barrel has also introduced a new menu category. It is planning to roll over innovative promotional offerings coupled with the core menu addition that should improve its top line performance going forward. Moreover, its product development team is energetically concentrating on creating entrees through offering a fresh ingredients, bolder flavors and customizable selections that should enrich customer experience at its restaurants.
Also, the company this holiday season plans to offer its customer a triple berry french toast. This product offering will be stuffed with cream cheese blueberries, blackberries and raspberries and served with warm raspberry syrup. It is additionally expected to roll over several breakfast and lunch dinner entrees to its core menu this fiscal year that were offered for a limited period in fiscal 2014.
Furthermore, its new menu category Wholesome Fixin’s offers additional healthier menu items. Cracker Barrel is experiencing healthy traction in the market for its Wholesome Fixin’s Southern Trout offering and plans to add it to its core menu this fiscal year. Its Campfire Beef and Campfire Chicken meals, which were introduced to offer a flavorful summer dining experience to customers, are expected to gain more traction going forward. It is additionally executing various marketing and sales activities.
Cracker Barrel during the fourth-quarter conducted six weeks of national cable advertising. It also ran an online nationwide charity auction for eight weeks. It has also increased the level of digital engagement in connection with its guests. This advertising campaign should certainly supplement its sales this fiscal year.
Ending remarks and valuations:
Cracker Barrel looks resurrected with plenty of strategic initiatives and smart moves that should certainly enhance its performance in the fiscal 2015. Moreover, the analysts forecast CAGR of 8.75% for the next five years that indicate remarkable growth for the company in the long-run. The stock is currently trading at the trailing P/E of 19.36 and forward P/E of 16.37 that signifies a fair valuation for the stock that has plenty of room to grow in the coming years.
