Cracker Barrel Old Country Store executives have drawn down the $487 million available to them under their revolving credit line and suspended their dividend and stock buyback programs as they process the COVID-19 shockwave.
The Lebanon-based company also said Wednesday it will write down its entire investment in Punch Bowl Social, the eatertainment concept into which it has invested more than $130 million.
In an update to investors Wednesday morning, CFO Jill Golder said she, President and CEO Sandy Cochran and other execs are focusing on preserving Cracker Barrel’s core business. They have converted nearly all of their stores to provide pick-up and delivery services only, cut operating expenses where possible and eliminated non-essential spending.
The recent credit line drawdown — other local public companies, including Ryman Hospitality, Genesco and J. Alexander’s have done the same in recent days — leaves Cracker Barrel with about $400 million in cash and equivalents to put toward working capital and operations. The company also will save $20 million from suspending a stock buyback plan authorized less than three weeks ago and more than $30 million per quarter by suspending its dividend. (Its recently declared payout is being deferred for four months.)
Cutting back to their core business means Cochran and her team are saying goodbye to their investment in Punch Bowl Social, which they made just last summer. Cracker Barrel owns about 59 percent of the young eat-and-play concept with 19 locations and have invested about $80 million in the company while also taking on about $50 million in debt.
But Punch Bowl Social has closed its locations and laid off just about everyone on its payroll and its main lender last week said it would take control of the company’s properties unless Cracker Barrel guaranteed all of Punch Bowl Social’s debt. That is something Cochran and her team were not prepared to do at this point, which means Cracker Barrel will record a non-cash impairment charge of $133 million in the current quarter.
Shares of Cracker Barrel (Ticker: CBRL) popped 18 percent to $94.92 during Tuesday’s big market bounce. That still leaves them well off their levels of a month ago, when they were trading above $160.
This post originally appeared in our sister publication, the Nashville Post.