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Same-store sales of  Cracker Barrel Old Country Store Inc. (CBRL - Snapshot Report) for the four-week period ended November 25, 2011 grew 1.2% for restaurants and 2.7% for retail, benefiting from improved traffic and operational performance and compared favorably with the past quarters.

In the month of October, retail comps rose 0.2% while restaurant comps inched down 0.2%. In the month of September, comps fell 2.4% in restaurants and 1.7% in retail. In August, comps tumbled 2.5% in restaurants and 3.1% in retail. Thus, the company’s comps are continuously exhibiting growth trend.

The upside in comparable restaurants sales for the recent month was driven by higher average check of 2.2%, partially offset by a 1% decline in traffic. The company also experienced record holiday sales on Thanksgiving Day.

Cracker Barrel, a chain of combined restaurant and gift stores in the US, is undertaking several initiatives like media spending, refined menu and pricing strategies and improved restaurant operations and services to drive traffic and sales. However, cost inflation and uncertain economic conditions, which will likely result in lower traffic, remain challenges going forward.

In the recently reported first quarter of 2012, comparable restaurant sales dropped 1.6% due to a 3.8% decline in traffic, partially offset by average check upside of 2.2%.  Higher average check was driven by a 2.1% rise in menu prices and a favorable mix impact of 0.1%. Comparable retail sales in the quarter also dipped 1.3%.

For 2012, the company continues to expect total revenue in the range of $2.55 billion to $2.6 billion and comparable restaurant and retail sales to be flat to up 1.5%. Adjusted earnings per share are projected in the range of $4.10 to $4.25. Cracker Barrel expects commodity cost pressure to continue in 2012, and foresee inflation of 5.5%-6.5%. Operating margin is estimated to be in the single-digit range of 7% to 7.2%.

Lebanon, Tennessee-based company also continues to accelerate unit growth. At the end of the first quarter of 2012, the company had 606 owned locations and in 2012, Cracker Barrel plans to open 15 new units.

Cracker Barrel currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. Its prime competitors are Denny's Corporation (DENN - Snapshot Report) and DineEquity Inc. (DIN - Snapshot Report).

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