Shares of the Cracker Barrel Old Country Store (Nasdaq: CBRL) were down about 2% after the markets opened primarily due to the weak earnings outlook for fiscal 2019, failing to meet estimates. For the second quarter, the restaurant chain reported better-than-expected results due to strong restaurant sales.
For the fiscal 2019 period, the company expects adjusted earnings to be $8.87 per share compared to $9.12 expected by the street. However, the revenue forecast of $3.05 billion came in line with estimates. Cracker Barrel expects comp store restaurant sales to grow 1% to 2% and retail comp store sales to grow approximately 1%.
Cracker Barrel’s Q2 revenues rose 3% to $811.7 million and adjusted earnings came in at $2.73 per share, both surpassing street consensus. Reported earnings decreased to $2.52 per share due to a one-time tax benefit reported last year. Operating margins reduced to 9.5%, compared to 9.7% from last year. Margins were hurt by an increase in labor and other expenses offset by the reduction on the general and administrative expenses.
On the Q2 key business metrics front, same-store restaurant sales grew 3.8% while restaurant traffic growth saw a paltry increase of 0.1%. Increase in food prices helped to improve the average check by 3.7%. However, comp-store retail sales decreased by 1.4% over last year. Cracker Barrel’s stock has improved 5% in the last 12 months and increased by 6% in 2019.