Cracker Barrel Old Country Store, Inc.

Good day and welcome to the Cracker Barrel Fiscal 2024 Second Quarter Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Caleb Yohannes, Vice President, Investor Relations and Business Transformation. Please go ahead.

Thank you. Good morning and welcome to Cracker Barrel's second quarter fiscal 2024 conference call and webcast. This morning we issued a press release announcing our second quarter results. In the press release and on the call, we'll refer to non-GAAP financial measures for the second quarter ended January 26, 2024. The non-GAAP financial measures are adjusted to exclude the non-cash atomization of the assets recognized from the gains on the sale and leaseback transactions, expenses related to the company's CEO transition, expenses associated with the strategic transformation initiative, a corporate restructuring charge, and an employee benefits policy change and related tax impact. The company believes that including these items for the financial results provides investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me this morning are Cracker Barrel's President and CEO, Julie Massino, and Senior Vice President and CFO, Craig Pimels. Julie and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements which involve risks and uncertainties that in many cases are beyond management's control, may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect the results summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Julie Messina. Julie?

Good morning, and thank you. In the second quarter, we delivered solid sales, which included a meaningful improvement in our traffic trend of 300 basis points in Q2 compared to Q1. Our traffic driving tactics, particularly our efforts to improve the guest experience and the effectiveness of our marketing, are working in support of this improvement. While we were pleased with our sales results, our margins remained pressured. As I will touch on later, improving profitability is a top priority. we are confident we will see improvements as our initiatives gain traction, but we anticipate continued margin pressure in the near term, particularly in Q3, and improved margins in Q4. I'm going to start by covering some highlights from Q2, and then Craig will review our financials and give an update on our outlook. Then I'll come back and wrap up by providing an update on our strategic transformation and some of our plans to drive continued performance improvements. Our second quarter is an especially important quarter for us due to, first, our seasonally higher volume, and second, because of the emotional connection our brand has with guests over the holidays. We have the privilege of so many of them inviting us into their homes or coming into our stores to celebrate the holidays. This is truly special. As I noted on our last call, we had an excellent Thanksgiving from a sales perspective, and the teams carried this momentum through the remainder of the quarter. I want to thank our 70,000 plus employees for their tireless efforts and extraordinary hard work during the quarter to help our guests celebrate this special holiday season. From a culinary and marketing perspective, we leaned into our seasonal guest favorites such as country fried turkey and cinnamon roll pie, as well as our off-premise offerings. We continue to see positive results from our marketing investments and refined tactics. In addition to promoting our seasonal offerings, a key focus of our marketing efforts during the quarter was highlighting Cracker Barrel Rewards. For this campaign, we partnered with Dolly Parton to promote Cracker Barrel Rewards and her collaborative album, Rockstar. This campaign was a resounding success and delivered a large number of impressions and high engagement rates and drove additional gains to our already strong levels of enrollment. We remain pleased with the early results of Cracker Barrel Rewards, which, as a reminder, launched in September. In addition to the strong enrollment levels, we are encouraged by the engagement, feedback, and response rates we are seeing. One of the many benefits of the program is how it enhances our ability to directly engage with guests. We continue to test various campaigns and activations and measure their efficacy, and we're excited about learning more about what drives engagement with our members. For example, Loyalty members accounted for nearly 50% of our Thanksgiving heat and serve sales, which we believe was partially driven by our direct engagement with them around this offering. We continue to believe the program, with its easy to use and engaging design and rewarding value, will be a meaningful brand differentiator and traffic driver over the long term. Our retail business remains challenged. We believe this is due in large part to the pressures the broader retail industry is facing. particularly in more discretionary categories, which is resulting in a highly promotional environment. While guests responded well to our value-focused holiday assortments, overall sales performance was softer than anticipated. However, the team has done a good job managing inventories and markdowns. Despite the sales softness, we grew margin rate over the prior year, and our inventories, which are below prior year, are well positioned. I'll now turn the call over to Craig for a more detailed look at the quarter from a financial perspective and to discuss our financial outlook for the rest of the year. After he finishes, I will then provide an update on our strategic transformation. Craig?