November 24, 2009 / 12:53 PM / 10 years ago

UPDATE 2-Cracker Barrel Q1 beats Street, ups FY EPS view

* Q1 EPS $0.78 vs est $0.62

* Revenue $581.2 mln vs est $576.1 mln

* Q1 restaurant same-store sales rise 0.6 pct

* Sees FY10 EPS cont ops $3.05-$3.30

* Shares rise 9 pct (Adds analyst comments, conference call details; updates share movement)

By Renju Jose

BANGALORE, Nov 24 (Reuters) - Restaurant operator Cracker Barrel Old Country Store Inc (CBRL.O) posted better-than-expected quarterly results on lower food costs and raised fiscal 2010 earnings outlook, sending its shares up 9 percent to a 52-week high.

Cracker Barrel expects commodity costs to fall 1 to 2 percent in fiscal 2010 as the company has more visibility on food costs with key commodities locked for the year, Chief Financial Officer Sandra Cochran said on a call with analysts. “We will continue to see significant benefits in the coming quarters on the cost of sales line from lower commodity costs, and the corresponding price increase multiplying that impact,” Keybanc Capital Markets analyst Brad Ludington said by phone.

The company, which also runs retail stores in its eateries, now sees earnings of $3.05 to $3.30 a share from continuing operations in 2010, up from its prior view of $2.85 to $3.10 a share.

It expects 2010 revenue to range from flat to a rise of 2 percent. It earlier forecast a rise between 0.5 percent and 2.5 percent.

The company, however, warned that consumer spending will remain tight in 2010 with the continued rise in unemployment.

“It appears that their topline guidance is based on the assumption that the unemployment rate keeps going up and things will get worse before getting better,” Keybanc’s Ludington said.

SOLID BEATS

For the first quarter ended Oct. 30, Cracker Barrel earned $18.0 million, or 78 cents a share, compared with $12.8 million, or 57 cents a share, a year earlier.

Analysts on average expected 62 cents a share, before items, according to Thomson Reuters I/B/E/S.

Revenue rose 1 percent to $581.2 million, topping analysts’ consensus of $576.1 million.

“In the first quarter, lower food costs, positive sales leverage and lower operating expenses produced significantly better margins at the store operating level compared with a year ago,” Chief Executive Michael Woodhouse said in a statement. Food costs fell 2 percent in the quarter helped by price declines in dairy, eggs and seafood.

Shares of Lebanon, Tennessee-based Cracker Barrel were up 7 percent at $37.90 Tuesday afternoon on Nasdaq. They touched a high of $38.70 earlier in the day. (Reporting by Renju Jose; Editing by Anne Pallivathuckal and Ratul Ray Chaudhuri) ((renju.jose@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 080 4135 5800; Reuters messaging: renju.jose.reuters.com@reuters.net))

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