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CBRL changes '09 outlook after 1st-Q profit drop

LEBANON Tenn. CBRL Group Inc., parent of the 581-unit Cracker Barrel Old Country Store chain, reported a nearly 8-percent drop in first-quarter profit against rising costs and falling sales, a trend the company said it expects to continue through its fiscal 2009.

CBRL expanded downward its earnings forecast for the year, which ends in July, and reversed earlier projections for increased same-store sales. CBRL said it now expects per-share earnings of between $2.65 and $3.00, compared with earlier guidance of between $2.80 and $3.00. CBRL earned $2.80 per share in fiscal 2008.

The company also said it expects same-store restaurant sales to fall between 1 percent and 3 percent for the year. In September, the company had estimated that fiscal 2009 same-store restaurant sales would rise between 2 percent and 3 percent.

"With the continued uncertainty in the economy and how it is impacting casual dining, we have lowered our sales growth to include the possibility of a decrease in revenues for fiscal 2009," president and chief executive Michael Woodhouse said in a statement.

The company already has initiated radio advertising focused on new menu offerings to increase guest traffic, it said.

For the first quarter ended Oct. 31, CBRL posted net income of $12.8 million, down 7.9 percent from $13.9 million in the year-ago quarter. Earnings per share were flat at 57 cents, as CBRL had 7-percent fewer shares outstanding in the latest quarter. The earnings result beat the average analyst forecast of 52 cents per share, according to Thomson Financial.

Latest-quarter revenue fell 1 percent to $573.9 million, CBRL reported. Same-store restaurant sales declined 3.2 percent, and reflected a 6-percent decline in customer traffic and a 3.3-percent increase in the average check. Each month of the quarter saw same-store sales deteriorate from the prior month, ending with a 4-percent decline in October, which included a 7.2-percent drop in traffic. First-quarter same-store retail sales fell 2.3 percent.

First-quarter income from continuing operations fell nearly 8 percent to $12.8 million, as lower interest expense and a lower effective tax rate helped offset a 10-percent slide in operating income, the company said. CBRL blamed the dip in operating income on higher food, utility and other operating expenses.

The company also said it had suspended its share repurchase program for the current fiscal 2009, and that any excess cash would be used to pay down corporate debt.

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