Cracker Barrel Earnings Rise, 2012 Forecast Still Leaving Some Shareholders Wary

Cracker Barrel Old Country Store Inc. announced on Tuesday that its third-quarter earnings rose 25% desptire claims by activist investors Sardar Biglari that the customers client base was deteriorating and profits were declining.

Upon news of the company’s increased traffic shares at Cracker Barrel rose by 5% in earlier trading but then retreated to a 1% gain as Cracker Barrel’s summer forecasting was not quite as rosy. Shares at the restaurant chain are up 17% this year to $58.86.

According to the company’s financial reports earnings in fiscal 2013 should be around $4.50 to $4.70 while analysts polled by Thomson Reuters expect earnings of $4.62.

Coming out of the recession Cracker Barrel had suffered from increasing customer traffic declines which led Biglari to demand that several members from the company’s board of directors be fired. However since taking over as CEO in September 2011 Sandy Cochran has been busily reworking the company’s menu, making the chain more value-oriented and even attractive to younger crowds. Cochran has also worked to reduce Cracker Barrel costs.

For the quarter ended April 27 Cracker Barrel same-store sales were up 3.1% while average check growth was up 2.5% and guest traffic was up 0.5%.

In the third quarter Cracker Barrel reported a profit of $19 million, up from $15.2 million one year prior. Revenue also increased by 4.5% to $608.5 million, just shy of analyst projections of $609 million.

By beating expectations Cracker Barrel was able to raise per-share earnings for the year to between $4.35 and $4.45, up from $4.20 to $4.35.

To stop the possibility of hostile takeover attempts the company also increased its quarterly dividend by 60% while adding a so-called poison pill provision that essentially prevents any shareholder from owning more than a 20% stake. Biglari it should be noted owns more than 17% of Cracker Barrels outstanding shares.