CBRL's 3-Q net drops 49%

LEBANON Tenn. CBRL Group Inc., operator of 559 Cracker Barrel Old Country Store restaurants and gift shops, reported a 49 percent decline in its net income for the fiscal 2007 third quarter. The company blamed the drop primarily on higher interest expense related to recapitalization efforts begun last year.

For the quarter ended April 27, CBRL earned $12.3 million, or 45 cents per share, compared with $24 million, or 47 cents per share, in the prior-year third quarter. The company's per-share income rose because of the reduction in shares outstanding, also a result of the recapitalization efforts, which included share repurchases.

Latest-quarter revenues totaled $549.1 million, an increase of 2.8 percent from the prior-year. Same-store restaurant sales at Cracker Barrel remained unchanged from a year earlier and reflected a 1.4-percent rise in the average check offset by a 1.4-percent decline in guest traffic. Same-store retail sales declined 0.9 percent.

The company said higher labor costs from minimum wage increases in various states; higher insurance, advertising and maintenance costs; and increased bonus accruals were other unfavorable expense items that affected third-quarter results. These costs were partially offset by increases in menu pricing and lower costs of goods sold in the retail sector, the company said.

For the current fourth quarter, CBRL said it expects positive same-store restaurant sales, up as much as 1 percent from the year-earlier quarter, aided by 2-percent menu price increases. It expects fourth-quarter revenue to increase as much as 12.5 percent from fiscal 2006, aided by about $50 million from an extra operating week this fiscal year versus the previous year. In the fourth quarter of fiscal 2006, CBRL accrued revenues of $671.1 million.