Cracker Barrel Old Country Store ((CBRL)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Cracker Barrel’s recent earnings call painted a picture of mixed performance, with notable achievements in revenue and loyalty program growth, yet significant challenges such as a decline in traffic following a brand logo change and increased costs impacting margins. While strategic initiatives like pricing and loyalty program expansion show promise, immediate challenges need addressing to sustain growth.
Revenue Growth
Adjusting for the impact of the 53rd week in the prior year, Cracker Barrel reported a revenue growth of 2.2%, with comparable store restaurant sales increasing by 3.5% and adjusted EBITDA growing by 9% for the full year. This indicates a steady growth trajectory despite the challenges faced.
Q4 Revenue Performance
In the fourth quarter, Cracker Barrel’s total revenue reached $868 million, marking a 4.4% increase when excluding the 53rd week benefit. Comparable store restaurant sales grew by 5.4%, showcasing a robust performance in the restaurant segment.
Strategic Pricing Success
The company successfully implemented strategic pricing in Q4, achieving a 5.4% increase. Additionally, a favorable menu mix contributed an extra 1%, highlighting effective pricing strategies.
Loyalty Program Growth
Cracker Barrel’s Rewards program saw significant growth, adding 3 million members to surpass 9 million members. This program now accounts for over 35% of tracked sales, demonstrating its importance in driving customer engagement and sales.
Cost Management
Labor and related expenses improved by 100 basis points to 36.5% of revenue, driven by menu pricing and enhanced productivity. This improvement reflects the company’s focus on cost management.
Traffic Decline Post Logo Change
The company experienced an 8% decline in traffic following a logo change on August 19, with an anticipated Q1 traffic decline of 7% to 8%. This presents a significant challenge that needs to be addressed to maintain customer loyalty.
Retail Sales Decrease
Comparable store retail sales decreased by 0.8% in Q4, indicating a slight downturn in the retail segment that the company will need to address.
Noncash Store Impairment Charge
Cracker Barrel’s GAAP financial results included a noncash store impairment charge of $16.2 million, primarily related to low-performing Maple Street stores, highlighting areas of underperformance.
Increased Operating Expenses
Operating expenses rose to 24.9% of revenue, a 100 basis point increase due to higher advertising and depreciation costs, impacting overall profitability.
Tariff Expense Impact
The retail cost of goods sold increased by 90 basis points due to $2.4 million in additional tariff expenses, reflecting external cost pressures.
Forward-Looking Guidance
Looking ahead to fiscal 2026, Cracker Barrel anticipates total revenue between $3.35 billion to $3.45 billion, with expected annual traffic declines of 4% to 7% and pricing increases of 4% to 5%. The company plans to open two new Cracker Barrel stores and close 14 Maple Street units, with capital expenditures estimated at $135 million to $150 million. Additionally, a new $100 million share repurchase program and a quarterly dividend of $0.25 per share were announced.
In summary, Cracker Barrel’s earnings call highlighted a mixed performance with strong revenue growth and loyalty program expansion but faced challenges such as traffic decline and increased costs. The company’s strategic initiatives show promise, but addressing immediate challenges will be crucial for sustained growth.