Cracker Barrel lowers its expected fiscal Q3 diluted EPS to US$1.18/share-US$1.23/share, cites continued challenging consumer environment, increasingly promotional competitive landscape, overall reduction in vehicle travel

LEBANON, Tennessee , April 30, 2014 (press release) – Provides Third Quarter Update and Revises Guidance Announces 33% Increase in Quarterly Dividend

On May 1, 2014, Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company") (CBRL) will hold a meeting for securities analysts and institutional investors at its home office in Lebanon, Tennessee. As part of the presentation, senior executives from the Company will present an update to the priorities and initiatives underlying Cracker Barrel’s “Enhance, Expand, Extend” strategy in order to continue to generate long-term value for shareholders:

Enhance the Core: Continue to drive traffic at its existing stores by continuing the focus on the diversity of its menu offerings, expanding the demographic reach of the Cracker Barrel brand, leveraging technology to enhance its guests’ experience, and utilizing more targeted advertising campaigns and channels; continue to increase the average check by selectively adopting tiered pricing across its geographies; and further increase its operating margins by re-engineering certain store processes

Expand the Footprint: Continue prudent, yet profitable new growth employing proven site selection tools; introduce a new, more efficient “Fusion” store prototype

Extend the Brand: Build on the initial success of Cracker Barrel’s licensing initiative to expand the products offered and channels served

As part of these initiatives, Cracker Barrel will also outline a new three-year cost optimization program intended to generate at least $50 million in annual operational expense savings by fiscal year 2017. This program is focused on enhancing labor productivity, further improving store management and operations, and capturing utilities savings.

The Company believes the above initiatives will result in approximately 4% annual top line growth and, net of higher advertising, wages and benefits costs, an approximate 100 basis point improvement in operating margin by fiscal year 2017.

Comparable Stores Sales and Guidance Update

In conjunction with the May 1 Analyst and Institutional Investor Meeting, the Company also reported today its comparable store sales through April 28, 2014 for the 13-week third quarter ending May 2, 2014. 

The Company believes a continued challenging consumer environment, an increasingly promotional competitive landscape, particularly within the dinner daypart, and an overall reduction in vehicle travel – due both to weather and shortened vacation periods – impacted comparable store traffic, restaurant sales and retail sales during the quarter to date. Comparable store traffic and sales in March and April also reflect the later Easter holiday compared to the prior year period. As a result of these impacts, the Company is lowering its previous third quarter earnings guidance, and now expects to report earnings per diluted share of between $1.18 and $1.23. The Company notes that this guidance does not include expenses related to the Special Meeting of Cracker Barrel Shareholders on April 23, 2014.

Dividend Increase

As a result of the Board and management’s confidence in the Company’s strategy, and in keeping with its focus on delivering shareholder value, the Company also announced today that its Board of Directors declared a quarterly dividend of $1.00 per share on the Company’s common stock, reflecting an increase of 33% over the previous quarter’s dividend, and a more than 350% increase over the last dividend prior to the announcement of the Company’s strategic priorities in September 2011. The dividend is payable on August 5, 2014 to shareholders of record as of July 18, 2014.

"As we discussed in our second quarter conference call, the severe winter weather continued into our third quarter, negatively impacting our traffic and sales,” said Sandra B. Cochran, President and Chief Executive Officer of Cracker Barrel. “Additionally, we believe consumers remain economically challenged, our competitors have become increasingly promotional, and overall automobile travel – which disproportionally affects our business – continues to be soft. Nevertheless the continued execution of our strategic plan, along with our strong cash flow generation, provided the Board with the confidence to increase the quarterly dividend for the fifth consecutive year. We look forward to discussing these plans at tomorrow’s Analyst and Institutional Investor Meeting.”

Tomorrow’s presentations are scheduled to begin at 9:00 a.m. CDT (10:00 a.m. EDT). The Company expects the presentations to conclude by approximately 12:30 p.m. CDT (1:30 p.m. EDT). A live webcast of the presentation will be available on-line in the Events area of the Company’s website at investor.crackerbarrel.com. An on-line replay of the webcast will be available until May 15.

About Cracker Barrel

Cracker Barrel Old Country Store restaurants provide a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America’s country heritage…all at a fair price. The restaurants serve up delicious, home-style country food such as meatloaf and homemade chicken n’ dumplins as well as our signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences.

Cracker Barrel Old Country Store, Inc. (CBRL) was established in 1969 in Lebanon, Tenn. and operates 627 company-owned locations in 42 states. Every Cracker Barrel unit is open seven days a week with hours Sunday through Thursday, 6:00 a.m. – 10:00 p.m., and Friday and Saturday, 6:00 a.m. – 11:00 p.m. For more information, visit: crackerbarrel.com.

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