The company reported net income of $91.1 million, a 72.9 percent increase over prior year second quarter net income of $52.7 million. The GAAP diluted earnings per share were $3.79, which included a $1.63 per share benefit resulting from the Tax Act, compared to $2.19 in the prior year second quarter. Of this $1.63 per share tax benefit, $1.06 resulted from a one-time non-cash revaluation of the company's net deferred tax liability.
With the Tax Act becoming effective on Jan. 1, prior to the end of the company’s second quarter, it lowered the federal statutory corporate income tax rate from 35 percent to 21 percent. This rate change yielded a second quarter blended federal statutory tax rate of 26.9 percent for Cracker Barrel. “The second quarter effective tax rate was -24.9 percent, which includes both the change of the statutory rate as well as the full recognition of the tax benefit of certain capitalized assets and a non-cash benefit of approximately $25 million from the revaluation of the company's net deferred tax liability,” according to the company.
Total revenue for the quarter was $787.8 million, an increase of 2 percent over the second quarter of 2017.
Comparable restaurant sales climbed 1.1 percent, the company said, which included a 2.0 percent increase in average check that was partially offset by a 0.9 percent decline in store traffic. The average menu price increase for the second quarter was 2.3 percent. Comparable retail sales rose 0.5 percent, the company reported.
"I am pleased that we delivered positive comparable store sales in both restaurant and retail, improved upon our first quarter sales results, and outperformed the casual dining industry,” President and CEO Sandra B. Cochran said in a statement. “Our second quarter operating income margin was pressured by several factors such as expenses related to our initiatives and increased commodity inflation. Our teams continue to make meaningful progress on key business initiatives as we set the foundation for future growth."
For the third quarter of 2018, the company expects to report earnings per diluted share of between $1.85 and $1.95.
Total revenue for the fiscal year is estimated at $3.1 billion, which includes the opening of eight or nine new Cracker Barrel restaurants and three new Holler & Dash stores; and higher comparable restaurant sales of between 1.0 percent and 2.0 percent, the company said. Operating income margin is expected to be in the range of 9.5 percent to 10 percent of total revenue for fiscal 2018.
The company expects to report diluted earnings per share of between $10.35 and $10.55 for fiscal 2018, driven primarily by the changes in the anticipated tax rate.
The company estimates a blended effective tax rate for fiscal 2018 between 11 percent and 14 percent. For the full fiscal year, the enactment of the Tax Act will result in a total tax benefit of approximately $45 million to $50 million. Cracker Barrel plans to reinvest approximately $10 million to $12 million of the tax benefit to “further strengthen the brand, support strategic initiatives and enhance the employee experience,” according to the company.