CBRL Group (CBRL) is negotiating the sale of its three Carmine Giardini's Gourmet Market stores after concluding that the stores need a more "entrepreneurial" touch than is possible in a "large chain operation." This divestiture, along with the closure of four underperforming Cracker Barrel restaurants and three Logan's Roadhouse stores, will result in a charge of $22 million to $24 million, or 38 cents to 42 cents a share, in the fourth quarter ending August 3.
CBRL acquired Carmine Giardini's in April 1998 for $13 million of cash and stock. Since then, the company's commitment to expanding the chain, which it regarded as more of a research project, has diminshed. Last year, Carmine Giardini, the namesake and founder of the three-store Florida concept, began building a competing gourmet market across the street from the CBRL-owned Carmine Giardini's Gourmet Market.
"We decided it was time to exit the Carmine's business and concentrate our efforts and management resources on our more developed concepts," Dan Evins, chairman of CBRL, said in a release Thursday.
The closed Cracker Barrel and Logan's restaurants "were originally selected at a time of rapid growth for each concept," 1994-1998 for Cracker Barrel and prior to CBRL's 1999 acquisition of Logan's for those locations, Mr. Evins said. Year to date, CBRL has opened 15 Cracker Barrels and 13 Logan's.
The Lebanon. Tenn.-based company reaffirmed its expectation of earning "in the high $0.40's range" per-share before the 38 cents-42 cents charge in the fiscal fourth quarter ending in two weeks, versus a 42 cents a share profit in the year-ago period. Thirteen analysts surveyed by First Call had been projecting an average profit of 48 cents a share.
In the quarter, same-store sales at Cracker Barrel restaurants are up roughly 4%, while retail sales at the gift shops are down 1.5%-2% and Logan's units are down 2%-2.5%.
CBRL shares settled Wednesday at $18.02. Their 52-week range is $11.75-$24.25.