Cracker Barrel beats, hikes dividend

Operating profits up 13%, shares poised to set all-time high

Cracker Barrel Old Country Store handily beat analysts' expectations in its third fiscal quarter and said it would hike its dividend by 50 percent.

In the three months ended May 3, Cracker Barrel earned $24.6 million, up from $19 million a year ago. Operating income climbed 13 percent to more than $44 million, helped in part by slow labor cost growth, while interest costs fell 9 percent from early 2012 as the company paid down $125 million of long-term debt.

Shares of Cracker Barrel (Ticker: CBRL) were up more than 4 percent to $93 and change in pre-market trading, setting themselves up to close above $90 for the first time ever. They're up more than 50 percent in the past 12 months.

Total revenues at Lebanon-based Cracker Barrel Old Country Store rose 5 percent for the quarter to $640 million. Same-store restaurant sales for the quarter rose 3.1 percent while retail store sales jumped 5.5 percent. Both numbers were led by a very strong March but included negative year-over-year comparisons for April.

The new quarterly dividend of 75 cents per share — up from 50 cents — will be payable on Aug. 5 to shareholders of record as of July 19. The board's move to lift the payout means it has tripled since late 2011. Doing so might appease 20 percent owner Sardar Biglari, who last fall promised to pay larger dividends as part of his push to win board seats. Earlier this year, Biglari — who will receive an extra $1.2 million each quarter under the new dividend policy — said Cracker Barrel should pay a special dividend rather than try to buy out his stake.

Helping power the dividend boost is the company’s 2006 interest rate swap that expired at the end of the third quarter. Combined with the debt paydown, that will lower Cracker Barrel's annual interest costs by about $25 million, or 70 cents per diluted share.