CBRL lowers outlook on consumer spending concerns

LEBANON Tenn. While reporting a 28.5-percent year-to-year drop in first-quarter profit and negative guest traffic at its 568-unit Cracker Barrel Old Country Store chain, parent company CBRL Group Inc. reduced its same-store sales and annual per-share earnings outlook, citing the “expectation of continued pressure on consumer discretionary income.”

On Wednesday, CBRL reported net income of $13.9 million for the quarter ended Nov. 2, compared with $19.4 million a year earlier. Revenue grew 4.1 percent to $581.2 million. Same-store restaurant sales rose 1.8 percent, which reflected a 1.1-percent decline in guest traffic offset by a 2.9-percent increase in the average check.

For the latest quarter, higher labor and other operating costs contributed to the year-to-year profit decline. In addition, year-earlier results included discontinued operations from the company’s Logan’s Roadhouse chain, which it sold in December 2006. First-quarter per-share profit totaled 57 cents, the same result as a year earlier when earnings included Logan’s income and also was based on a 32-percent larger share count.

From continuing operations only, first-quarter net income fell about 8 percent from a year ago to $14 million, but per-share income rose to 57 cents per share from 45 cents per share a year ago.

CBRL said same-store sales for the fiscal year ending in July are now expected to increase between 2 percent and 3 percent, down one percentage point from previous expectations. Per-share earnings are expected to total between $3 and $3.15, down from the previous range of between $3.05 and $3.20.

The company said new sales development programs are under way but are not expected to make “a meaningful contribution” to results before the second half of the company’s current fiscal year. CBRL also said it was introducing new staffing, training and food preparation initiatives to help reduce labor costs.