American restaurant chain and gift store operator Cracker Barrel Old Country Store, Inc. (CBRL) missed fourth-quarter expectations driven by industry-wide headwinds, including staffing, commodity and wage inflation, and the COVID-19 pandemic. Shares fell 2.7% on the news, closing at $135.16 on September 21.
The company reported quarterly adjusted earnings of $2.25 per share, missing analysts’ estimates of $2.33 per share. In the prior-year period, CBRL reported an adjusted loss of $0.85 per share. (See Cracker Barrel stock charts on TipRanks)
Moreover, revenue for the quarter stood at $784.40 million, up 58.4% year-over-year, and also missed the Street’s estimate of $793.01 million. Compared to the year-ago period, CBRL’s comparable restaurant sales grew 53.5% and comparable retail sales jumped 74.8%.
For full-year Fiscal 2021, CBRL posted revenue of $2.82 billion, an increase of 11.8% annually, and adjusted earnings stood at $5.14 per share, up a whopping 152%.
Commenting on the results, Sandra B. Cochran, President, and CEO of the company, said, “Our impressive field and home office support teams delivered on multiple fronts throughout the year, including cost-savings, the introduction of our new dinner menu, and the continued roll-out of beer and wine to our stores, and helped ensure our continued recovery in 2021. I’m confident that these and other initiatives position us well for 2022 despite the uncertain environment.”
Additionally, the company’s Board declared a quarterly dividend of $1.30 per share, which is the same as the pre-pandemic quarterly dividend. The dividend is payable on November 9, 2021, to shareholders of record on October 22, 2021. Also, the Board declared a share buyback authorization of up to $100 million of its common stock.
Due to pandemic-related uncertainty and ongoing business impact, Cracker Barrel is not issuing earnings guidance for Fiscal 2022. However, the company did warn of commodity and wage inflation to rise to mid-to-high single digits, with capital expenditures of around $120 million. The company expects to open three new CBRL locations and 15 new Maple Street Biscuit Company locations during FY2022.
In response to CBRL’s poor quarterly performance, Deutsche Bank analyst Brian Mullan lowered the price target on the stock to $155 (14.7% upside potential) from $195 and maintained a Buy rating.
Mullan states that the stock’s initial negative reaction was due to some unexpected disclosures. Having said that, the analyst believes that the conference call disclosures saved the day and “snatched victory from the jaws of defeat.”
Overall, the stock has a Hold consensus rating based on 1 Buy, 2 Holds, and 1 Sell. The average Cracker Barrel price target of $151.50 implies 12.1% upside potential to current levels. Shares have gained 14% over the past year.
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