Shares of Cracker Barrel Old Country Store (NASDAQ:CBRL) slid nearly 8% Tuesday on the company’s weaker-than-expected third-quarter profit, as an only meager improvement in sales could not offset higher commodity costs.
Rising food commodity prices have weighed heavily on restaurants and food manufacturers. Cracker Barrel’s reduction in general and administrative expenses, though, helped minimize the blow, leading to a cost of goods sold decrease of 3% during the period to $179.8 million.
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The Lebanon, Tenn.-based company posted net income of $15.2 million, or 64 cents a share, compared with $14.4 million, or 61 cents a share, in the same quarter last year. Analysts polled by Thomson Reuters were expecting a net income of 66 cents.
Revenue for the restaurant and gift shop chain was $582.5 million, up less than 1% from $578.23 million a year ago, short of the Street’s view of $594.5 million.
“We are disappointed in our results for the third quarter, as both restaurant and retail sales were below our forecast,” Cracker Barrel CEO Michael Woodhouse said in a statement. “Since many of our customers continue to feel the negative impact of economic conditions, we need to continue to focus our efforts on providing the great food, service, atmosphere and shopping experience that differentiates our brand.”
Looking ahead, the company anticipates a fourth-quarter revenue increase of 1% to 2.5%, which will reflect the opening of three new stores. Comparable store restaurant sales are expected to be flat while retail sales in its more established stores are expected to rise 1% to 3%.
For the full-year, the maker of country-style foods such as steak, biscuits and gravy expects earnings in the range of $3.80 to $3.90 a share. Wall Street is looking for a profit of $4.09.