Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) released the results for Cracker Barrel Old Country Store, Inc.’s second quarter of fiscal 2023, which ended on January 27, 2023. Earnings and sales were better than expected. Even though the bottom line went down from the previous quarter, the top line went up from one year to the next. Cracker Barrel stock gained 1% Wednesday.

Cracker Barrel’s president and CEO, Sandra B. Cochran said, “I am pleased with our second quarter results, as we delivered sales and operating income margin that exceeded expectations. I was especially pleased with our off-premise and retail performance. We are making great progress on key initiatives, and I believe we are well-positioned to deliver further performance improvements in the back half of the fiscal year.”

Earnings and Sales

The company’s adjusted earnings per share (EPS) for the second quarter of fiscal 2023 were $1.48, which was more than the average estimate of $1.33. In the same time period the year before, the company had adjusted earnings of $1.71.

For the quarter, sales were $933.9 million, which was more than the average estimate of $917 million. The top line also grew by 8.3% from the previous year. Strong growth in retail sales and more activity outside of the store were good for the company.

Details About Comps

Comparable store restaurant sales went up 8.4% in the reporting quarter compared to the same time last year. The main reason for the good results was that the average menu prices went up by 9%. The sales at similar stores went up 4.1% from the year before.

Getting Things Done

The cost of goods sold for the second quarter of the current fiscal year, excluding depreciation and rent, was $326.6 million, up from $283.6 million for the same time last year. The cost of goods sold, which doesn’t include depreciation or rent, went up by 210 basis points (bps) from the previous year and now makes up 35% of total sales. For the quarter, $45.5 million was spent on general and administrative costs. This is more than the $43.5 million that was spent during the same time last year.

The adjusted operating income for the second quarter of this fiscal year was $42.2 million, which is less than the $49.8 million that was made in the same quarter last year. This quarter, the adjusted operating margin was 4.5% instead of 5.8% in the same quarter last year. The main reasons for the drop were rising prices for commodities and for goods sold at retail.

As of January 27, 2023, cash and cash equivalents were worth $49.4 million. This was up from $38.7 million as of October 28, 2022.

At the end of the first quarter of fiscal 2023, stocks were worth $231 million. At the end of the second quarter, they were worth $187,3 million.

Long-term debt dropped from $483.7 million at the end of the first fiscal quarter to $454.1 million at the end of the second quarter.

The company said that each share will get a cash dividend of $1.30. On May 9, 2023, the dividend will be sent to the people who owned shares as of April 14, 2023.

2023 Outlook

Instead of expecting revenue to grow by 6-8% year over year, the company now thinks it will grow by somewhere between 7-9% in fiscal 2023. The company thinks that it will get $25 million from cost savings and improvements to its business model during the year. It is expected that the year’s adjusted operating income margin will be in the high 4% range. This includes adjusted operating income margin rates that are expected to be between 4.3 and 4.7% for the third quarter of fiscal 2023 and between 6.5 and 7% for the fourth quarter of fiscal 2023.

In fiscal 2023, the company thinks that wage inflation will be 6.5% and that commodity inflation will be between 8.5% and 9%. (with persistent inflationary pressures in areas like produce, eggs, dairy, and grains). For the fiscal year 2023, the effective tax rate is expected to be between 10 and 12%.

The company thinks that three to four new Cracker Barrel locations and fifteen new Maple Street Biscuit locations will open in the fiscal year 2023. Capital costs are expected to cost between $110 million and $120 million this year.

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