Cracker Barrel rallies on upbeat forecast as logo uproar subsides
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A Cracker Barrel restaurant displays a "Now Hiring" sign in Tampa, Florida, U.S., June 1, 2021. REUTERS/Octavio Jones
June 10 (Reuters) - Cracker Barrel Old Country Store shares rose nearly 30% on Wednesday after it reported a second straight quarter of surprise profit and lifted its annual targets, signaling that the restaurant chain is moving on from a tumultuous period of backlash around its logo change.
Store traffic was improving gradually, and consumers were responding to the company's efforts to introduce more add-ons and value-focused bundled items to its menu, executives said on a post-earnings call on Tuesday.
Visits to Cracker Barrel stores had taken a hit right after the company drew criticism from conservatives, including U.S. President Donald Trump, for its decision to change its decades-old logo of the image of an overalls-clad man known as "Uncle Herschel" leaning against a barrel.
Cracker Barrel's new logo, announced on August 19, stood for about a week. Its shares have dropped about 40% since the logo change, as of last close.
It now expects revenue of $3.27 billion to $3.30 billion for the year, compared with its previous target of $3.24 billion to $3.27 billion.
Brokerage Wells Fargo, which upgraded the stock's rating to "overweight," said the result confirms that a turnaround is gaining ground.
Cracker Barrel also now expects adjusted EBITDA of $120 million to $125 million, up from $85 million to $100 million.
It reported adjusted profit per share of 29 cents for the third quarter ended May 1, compared with estimates of a loss of 45 cents per share, according to data compiled by LSEG.
Cracker Barrel's shares jumped as much as 34.7% on Wednesday, to a near-nine-month high of $48.91.
The shares have a high level of short interest, and are up about 42% this year, as of last close.
The company's 12-month forward price-to-earnings ratio is 103.14, compared with an industry median of 14.85, according to data compiled by LSEG.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Sahal Muhammed)
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