Cracker Barrel (CBRL) Misses Q2 EPS by 8c, Revenues Beat

Cracker Barrel (NASDAQ: CBRL) reported Q2 EPS of $0.70, $0.08 worse than the analyst estimate of $0.78. Revenue for the quarter came in at $677.17 million versus the consensus estimate of $672.76 million.

Second Quarter Fiscal 2021 Highlights

• Dining room service was adversely impacted by the nationwide resurgence of COVID-19 during the quarter, resulting in increased dining room closures and capacity restrictions compared to the first quarter.
• For the second quarter, comparable store restaurant sales decreased 21.9% and comparable store retail sales decreased 15.3% compared to the prior year quarter.
• Comparable store off-premise sales grew 78% over the prior year quarter and represented approximately 30% of restaurant sales.
• GAAP operating income in the second quarter was $14.4 million, or 2.1% of total revenue. Adjusted operating income was $17.6 million, or 2.6% of total revenue, compared to prior year quarter GAAP operating income of $79.1 million, or 9.4% of total revenue. (See non-GAAP reconciliation below.)
• GAAP earnings per diluted share were $0.59, and adjusted earnings per diluted share were $0.70, compared to prior year quarter GAAP earnings per diluted share of $2.55. (See non-GAAP reconciliation below.)

Commenting on the second quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "The resurgence of COVID-19 during the busy holiday and travel season impacted our business on a variety of fronts, but I was proud that our teams were able to provide a hospitable and safe experience for our guests and especially pleased at the number of guests who made us a part of their holiday celebrations in this unprecedented environment. Despite the challenges we faced in the second quarter, we expect to return to stronger levels of performance in the back half of the year.

The COVID-19 resurgence we experienced around the country during the second quarter impacted our guests and our employees and produced headwinds for both sales and margins. While our sales were largely in line with expectations coming out of the first quarter, monthly sales in the second quarter were volatile, as the resurgence forced unanticipated dining room closures, increased capacity restrictions, and disrupted typical holiday seasonal travel patterns. These closures and capacity restrictions also shifted our mix to a higher percentage of off-premise business during the busy holiday season, including a higher percentage of Heat n' Serve sales, which is a lower margin offering and plays an outsized role in our holiday sales, particularly this year. Further, the shift to off-premise and the operational and staffing challenges caused by increased cases of COVID-19 negatively impacted food waste and labor efficiency during the quarter. Although we were pleased with our strong retail sales performance, the shift to a higher percent of total sales increased our cost of goods sold.

Despite these challenges, our teams did an outstanding job delivering hospitality and care to our guests, and we believe these efforts further enhanced our position as the preferred choice for many families for their holiday celebrations. Looking ahead, we believe that as dining rooms open to greater capacities in the spring and summer, we should continue to see improvement in both sales and margin and believe that our business is well-positioned to capitalize on a more normalized environment. We are particularly focused on our fourth quarter, which is typically one of our biggest and most important quarters of the year."

For earnings history and earnings-related data on Cracker Barrel (CBRL) click here.

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