Tuesday, restaurant and retail concepts operator CBRL Group Inc. (CBRL) reported a 1.2% decline in comparable store sales at its restaurants for the month of June, while comparable store sales at its retail stores were up 0.2%. The results were below the company's expectations. For fiscal year 2008, the company lowered its forecast for earnings and revenue growth citing the continuing negative pressure on consumers. The company's stock is down more than 11% in the regular trading session.
The comparable store sales for the month were compared with the four-week period ending June 29, 2007.
CBRL, an operator of Cracker Barrel Old Country Store restaurants and gift shops, said its comparable store restaurant sales for June included the effect of about 3.8% higher average check resulting primarily from an average menu price hike of 3.7%.
For the quarter-to-date period, comparable store sales at restaurants were down 0.6%, including the effects of about 3.6% higher average check. Comparable store sales at retail stores increased 1.3%.
For the year-to-date period, comparable store sales improved 0.7% at restaurants and includes the effect of an approximately 3.3% increase in average check. Comparable store sales at retail stores declined 0.4%.
Commenting on the results, Michael Woodhouse, the Chairman, President and Chief Executive Officer of CBRL said, "While our comparable store restaurant sales were below our expectations, we believe that we performed slightly better than the industry. We were also encouraged that, despite softer restaurant results and general consumer pessimism, our retail strategies are generating positive sales."
Last month, the Lebanon, Tennessee-based company reported that its comparable store sales in May were flat at restaurants, while same store sales at retail stores increased 2.3%. Comparable store restaurant sales for the month included the effect of about 3.5% higher average check mainly due to a 3.7% average menu price hike.
For fiscal year 2008, CBRL lowered its outlook for income from continuing operations and now expects earnings per share in a range of $2.77-$2.87. Earlier, the company forecast income from continuing operations between $3.02 and $3.12 per share. Analysts currently expect earnings of $3.03 per share for the year.
The company lowered its forecast for total revenue for the year to increase approximately 1.5% over revenues from continuing operations in fiscal 2007. Earlier, the company expected revenue to increase about 2% from last year, which included a 53rd week equaling $46.3 million of sales. Analysts expect revenues of $2.40 billion for the year.
On a 52-week basis, total revenue is now expected to increase 3.4%, including full-year comparable store restaurant sales increase of approximately 0.5% and full-year comparable store retail sales to be down slightly from last year. Previously, the company expected full-year comparable store restaurant sales to be up 1% to 1.5%, including about 3.6% of menu price increases, while full-year comparable store retail sales were targeted to be flat to up 0.5% compared to fiscal 2007.
As a result of this lower projected revenue, CBRL now expects fiscal 2008 operating income margin, excluding the effect of a 53rd week, to be approximately 6.4% compared to 7.0% in fiscal 2007. Previously, the company forecast fiscal 2008 operating income margin to be approximately 6.7%-6.8%.
Woodhouse said, "Although our range of guidance represents an increase in diluted earnings per share from continuing operations of between 10% and 14% over fiscal 2007, which included a 53rd week, we will not reach the earnings level that we previously forecast for fiscal 2008 given the continuing negative pressures on consumers."
The company's peer Brinker International Inc. (EAT) is scheduled to report its financial results for the fiscal year 2008 on August 5. Analysts expect the company to earn $1.42 per share on revenues of $3.61 billion for the year.
The casual dining sector is facing a tough time recently due to consumers' cutback on spending amid a stagnant economy and rising prices. The recent turmoil has driven some people away from restaurants toward lower-priced fast-food restaurant chains.
CBRL presently operates 577 Cracker Barrel Old Country Store restaurants and gift shops located in 41 states.
In Tuesday's regular trading session, CBRL is trading at $21.73, down $2.78 or 11.34% on a volume of 6,519 shares. The stock has been trading in a range of $22.96-$43.23 in the past 52 weeks.
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