LEBANON, Tenn. - Cracker Barrel (NASDAQ:CBRL) Old Country Store, Inc. (NASDAQ:CBRL), a well-known chain of combined restaurant and gift stores, announced a strategic transformation plan aimed at driving relevance, enhancing guest experiences, and increasing profitability. As part of the new strategy, the company has revised its capital allocation, reducing its quarterly dividend to $0.25 per share to support increased investment in the business.
The company's transformation plan includes refining the brand, improving the menu, updating store designs, expanding digital and off-premise capabilities, and enhancing the employee experience. Cracker Barrel has engaged a leading branding agency to assist with these changes, which are expected to drive organic growth and long-term value creation.
Cracker Barrel anticipates fiscal 2027 sales to range between $3.8 billion and $3.9 billion, with adjusted EBITDA projected at $375 million to $425 million. The company also plans significant capital expenditures over the next three years, totaling between $600 million and $700 million, which includes a major store remodel initiative.
However, Cracker Barrel warned that its financial results for the third and fourth quarters of fiscal 2024 are expected to fall below previous expectations, primarily due to weaker than anticipated customer traffic. This update comes alongside a review of the company's store portfolio, resulting in some closures and associated expenses.
The company's Board of Directors is committed to a balanced approach to capital allocation, with continued investment in the business as the top priority. The current share repurchase authorization, with $138 million remaining, is being maintained.
Cracker Barrel's outlook is subject to a number of assumptions, which could be affected by macroeconomic conditions such as inflation, consumer confidence, and interest rates. These uncertainties may impact consumer behavior and cause actual results to differ materially from expectations.
The information presented in this article is based on a press release statement from Cracker Barrel Old Country Store, Inc.
InvestingPro Insights
Amidst Cracker Barrel's strategic transformation, real-time data from InvestingPro paints a mixed financial picture for the company. Despite a recent dividend reduction, Cracker Barrel maintains its commitment to shareholders, as evidenced by its significant dividend yield of 9.19% as of April 2024. This aligns with the company's impressive track record of maintaining dividend payments for 43 consecutive years, an "InvestingPro Tip" that underscores its long-term commitment to shareholder returns.
InvestingPro data also reveals a market capitalization of $1.27 billion, with a P/E ratio of 15.16, adjusting to 13.44 in the last twelve months as of Q2 2024. This suggests that while the company is valued reasonably in relation to its earnings, investors are looking at a more favorable earnings picture when considering the adjusted P/E ratio. Additionally, the company's revenue growth remains modest at 1.02% in the last twelve months as of Q2 2024, signaling steady, albeit slow, top-line expansion.
On the cautionary side, an "InvestingPro Tip" indicates that Cracker Barrel's short-term obligations exceed its liquid assets, which could pose challenges for liquidity management, especially in the context of the planned capital expenditures. Moreover, the company's share price has experienced a significant drop over the last three months, with a 19.19% decline, reflecting market reactions to the anticipated below-expectation financial results for the latter half of fiscal 2024.
For investors seeking a more in-depth analysis, there are additional "InvestingPro Tips" available for Cracker Barrel, which can be accessed through the InvestingPro platform. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights that could inform investment decisions.
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