LEBANON, Tenn. - The Board of Directors of Cracker Barrel (NASDAQ:CBRL) Old Country Store, Inc. (NASDAQ:CBRL) has reached out to its shareholders, urging them to vote for its recommended slate of 10 nominees and reject the proposals of activist investor Sardar Biglari at the upcoming Annual Meeting of Shareholders on November 21, 2024. Shareholders on record as of September 27, 2024, are entitled to vote.
The board's communication highlighted the company's ongoing strategic transformation plan aimed at delivering sustainable value, emphasizing the importance of maintaining the current pace of change. The letter contrasts the board's strategy with Mr. Biglari's approach, which it characterizes as a plan to halt long-term investments in growth and extract capital from the company.
The board has endorsed Michael Goodwin, one of Mr. Biglari's nominees, for election to the board, citing that his election would give Mr. Biglari significant representation, considering his less than 10% ownership stake. However, the board has expressed reservations about Mr. Biglari and his other nominee, Milena Alberti-Perez, suggesting that their election could be value-destructive and risk the progress of Cracker Barrel's strategic initiatives.
Cracker Barrel's board has detailed its strategic transformation plan, which includes refining the brand, optimizing the menu, evolving the store and guest experience, and winning in digital and off-premise sectors. The board has voiced confidence in reaching financial goals for FY 2027 through the execution of this plan and has already noted positive results from initial steps taken.
In contrast, the board has criticized Mr. Biglari's past management of other restaurant brands, such as Steak 'n Shake and Western Sizzlin', alleging that his strategies led to declining performance, customer alienation, and value destruction.
The board's letter to shareholders is part of a broader effort to fend off a proxy contest from Mr. Biglari, marking his seventh attempt in 13 years. The company has made its case for continuity and strategic execution, positioning the current board's plan as the best path forward for growth and shareholder value.
This report is based on a press release statement from Cracker Barrel Old Country Store, Inc.
In other recent news, Cracker Barrel Old Country Store, Inc. has experienced significant developments. The company's fiscal 2024 fourth-quarter earnings report revealed a total revenue of $894.4 million, marking a 6.9% increase from the previous year, even though the adjusted EBITDA decreased to $57.4 million. However, the company's earnings per share (EPS) for the quarter fell short of both Loop Capital's estimate of $1.12 and the consensus estimate of $1.10.
Biglari Capital Corp., a major shareholder in Cracker Barrel, has called for significant changes at the restaurant chain, citing a substantial loss in shareholder value. The investment firm is seeking positions on the Cracker Barrel Board to address the company's challenges. Cracker Barrel also announced its fiscal 2025 plans, which include 25 to 30 store remodels and the opening of new Cracker Barrel and Maple Street locations.
Both Truist Securities and Loop Capital maintained their Hold rating on Cracker Barrel's shares. Loop Capital reduced its price target for the company to $45.00 from $50.00, while Truist Securities increased its price target to $44.00 from $42.00. These adjustments were made in light of Cracker Barrel's fiscal 2024 results and future plans. Despite these developments, both firms anticipate that customer traffic to Cracker Barrel may continue to face challenges. These are the recent developments for the company.
InvestingPro Insights
As Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) faces a proxy contest and defends its strategic transformation plan, recent data from InvestingPro sheds light on the company's financial position and market performance.
According to InvestingPro data, Cracker Barrel's market capitalization stands at $1.04 billion, reflecting the company's current valuation amidst its ongoing challenges and transformation efforts. The company's P/E ratio of 25.82 suggests that investors are pricing in some growth expectations, despite the recent pressures.
InvestingPro Tips highlight that Cracker Barrel has maintained dividend payments for 43 consecutive years, a testament to its commitment to shareholder returns even in challenging times. This long-standing dividend policy aligns with the board's emphasis on delivering sustainable value to shareholders.
However, another InvestingPro Tip indicates that short-term obligations exceed liquid assets, which could be a point of concern as the company navigates its strategic transformation. This financial metric may be particularly relevant to shareholders considering the board's plan versus Mr. Biglari's proposals.
The company's revenue for the last twelve months was $3.47 billion, with a modest growth of 0.81%. This slow growth rate underscores the importance of the company's strategic initiatives aimed at revitalizing the brand and improving performance.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could be valuable in assessing Cracker Barrel's prospects. There are 6 more InvestingPro Tips available for CBRL, providing a deeper understanding of the company's financial health and market position.
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