Cracker Barrel(US:CBRL)2019-06-04 19:43Financial Data and Key Metrics Changes - The company reported third quarter net income of $50.4 million or $2.09 per diluted share, compared to $2.03 in the prior year [20] - Total revenue for the quarter was $739.6 million, an increase of 2.5% from $721.4 million in the prior year [20] - Operating income increased by 2.8% to $65.1 million, maintaining an operating income margin of 8.8% [27] Business Line Data and Key Metrics Changes - Restaurant revenue increased by 2.9% to $610.1 million, while retail revenue increased by 0.6% to $129.5 million [21] - Comparable store restaurant sales rose by 1.3%, driven by a 3.1% increase in average check, despite a 1.8% decrease in traffic [22] - Comparable store retail sales decreased by 2.6%, primarily due to declines in women's apparel, accessories, and décor categories [23] Market Data and Key Metrics Changes - The off-premise business grew over 15% compared to the prior year, contributing positively to comparable store sales [23] - The company expanded third-party delivery coverage to nearly 350 locations, with plans to add over 100 additional stores by the end of the fiscal year [14] Company Strategy and Development Direction - The company is focused on enhancing the guest experience and employee engagement, with ongoing improvements to the PAR program [18] - A new Southern Fried Chicken platform was introduced, supported by a national marketing campaign and training initiatives [12][11] - The company plans to strengthen its retail position by optimizing assortments targeted at traveling guests [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year operating income margin in the range of 9% to 9.3% despite potential headwinds from food commodity and wage inflation [32] - The company remains cautious regarding visit frequency from lighter users, particularly in the fourth quarter [32] - Management anticipates total revenue of approximately $3.05 billion and comparable store restaurant sales growth of about 2% for the full fiscal year [30] Other Important Information - The company announced an increase in the regular quarterly dividend to $1.30 per share and declared a special dividend of $3 [9] - A new share repurchase program for up to $50 million of the company's outstanding shares was authorized [9] Q&A Session Summary Question: What is your commodity basket exposure to pork and outlook for pork prices? - Management indicated that approximately 10% of the commodity basket is pork, with expectations of increased volatility in pork prices for the next fiscal year [34] Question: What percent of retail inventory could be impacted by tariffs on Chinese imports? - Approximately one-third of retail inventory is imported, with efforts to mitigate tariff impacts through alternative sourcing and vendor partnerships [35] Question: Can you comment on the strength of new unit openings? - Initial sales from new units opened in the West Coast have been strong, contributing positively to overall performance [36] Question: Can you elaborate on the special dividend and share buyback program? - The Board remains committed to a balanced approach to capital allocation, prioritizing reinvestment in the business while returning excess capital to shareholders [39] Question: How do you plan to mitigate cost pressures from labor and commodity inflation? - Strategies include diversifying sourcing, adjusting pricing, and leveraging technology to improve efficiency [43][46] Question: What is the current status of the third-party delivery program? - The company is pleased with early results from third-party delivery and plans to expand vendor partnerships to enhance coverage [80]