Cracker Barrel Earnings Preview (CBRL): EPS Expected to Drop as Sales Decline Continues

Cracker Barrel Old Country Store, Inc. (CBRL) finds itself at a critical juncture as it prepares to release its earnings report today. The stock is currently trading above $52, down 15% in the last month.

Analysts expect Cracker Barrel to report an average earnings per share (EPS) of $0.77, down from $0.98 in the same quarter last year, reflecting weaker profitability. Revenue is projected to come in at $855.18 million, representing a year-over-year decline of 4.38%, indicating continued pressure on sales as the company navigates a challenging consumer and operational environment.

The iconic restaurant chain is currently grappling with evolving consumer behavior and macroeconomic uncertainties. While the company has shown resilience, particularly in its restaurant sales, headwinds in retail and a stock price lagging behind its moving averages raise concerns about its near-term trajectory.

The recent third-quarter fiscal 2025 results paint a mixed picture. Total revenue edged up 0.5% to $821.1 million, buoyed by a 1.0% rise in comparable store restaurant sales, which included a significant 4.9% boost from menu pricing.

However, this positive momentum was offset by a 3.8% decline in comparable store retail sales. While GAAP net income improved significantly to $12.6 million compared to a loss in the prior year, the market's reaction was far from celebratory.

Following the Q3 earnings announcement, CBRL's stock price dipped by 7.2%. Analysts pointed to softer traffic trends and broader economic anxieties as the primary drivers behind this decline. The decrease in retail sales, coupled with cautious consumer spending, has cast a shadow on the company's growth prospects.

Cracker Barrel has revised its fiscal 2025 guidance, projecting total revenue between $3.45 billion and $3.50 billion. The adjusted EBITDA forecast has also been raised to a range of $215 million to $225 million.

While these revisions signal confidence from management, they are tempered by persistent inflationary pressures, with commodity and hourly wage inflation both expected in the mid-2% range. Capital expenditures are projected to be between $160 million and $170 million. The upcoming Q4 earnings release will be crucial in determining whether the company can meet these expectations.

While the prevailing sentiment surrounding Cracker Barrel leans towards caution, a contrarian perspective suggests that the market may be overlooking the company's inherent strengths and potential for reinvention. The brand's deeply rooted connection with its customer base, built on nostalgia and a consistent dining experience, provides a solid foundation for future growth.

Instead of viewing the decline in retail sales as a fatal flaw, it can be seen as an opportunity to re-evaluate and optimize the retail offerings. By focusing on unique, high-margin products that align with the Cracker Barrel brand, the company can revitalize its retail segment and attract a new generation of shoppers.

Furthermore, Cracker Barrel's strategic initiatives, while still in their early stages, hold the promise of unlocking significant value. By embracing technology, streamlining operations, and enhancing the customer experience, the company can improve efficiency and drive long-term growth.

The company's commitment to its transformation plan, as highlighted by President and CEO Julie Masino, signals a proactive approach to addressing the challenges and capitalizing on the opportunities. While the road ahead may be bumpy, Cracker Barrel's iconic brand, loyal customer base, and strategic initiatives position it for potential resurgence.