• Cracker Barrel shares are down nearly 50% year-to-date, largely due to an ill-fated rebranding attempt in August.
• CBRL is heading for its worst annual drop since 1999, when shares declined 58.3%
• The decline comes amid pressure from activist investor Biglari Capital, which has batted for the removal of CEO Julie Masino, who was reelected last week. 

Cracker Barrel Old Country Store, Inc. is on track for its worst stock-market performance since 1999, after a controversial rebranding effort backfired and wiped out a chunk of its market value.

The Logo Controversy

The country-store chain was at the center of business news a few months ago after it announced a new logo, ditching the iconic "old white man" leaning on a barrel for a simplified, text-only design, and changes to its cafes and stores. 

That sparked a backlash, with critics, including several prominent Republican figures, seeing it as the Cracker Barrel abandoning its Southern country theme – a core part of its identity and a source of nostalgia for many Americans – for“woker” themes. 

President Donald Trump also weighed in, urging the company to revert to its original logo. "They got a Billion Dollars worth of free publicity if they play their cards right. Very tricky to do, but a great opportunity," he said. 

The logo change, part of a $700 million brand makeover, was later shelved, winning Trump's praise.

The Damage

Cracker Barrel's market capitalization has dropped about 50% since August, when the redesign was announced, to $641 million. Its shares are currently down about 47% year-to-date, and on track for their worst annual performance since 1999.

The company delivered mixed results for its fiscal fourth quarter in September, with revenue decreasing 3%, while net income declined a whopping 63%. At the time, CEO Julie Masino, who has been blamed for the fiasco, said that the backlash in fact showed consumers' attachment to Cracker Barrel.

Activist Pressure

In September, Biglari Capital, a long-time activist investor who tried to acquire Cracker Barrel in 2012, launched a campaign urging shareholders not to vote in favour of the re-election of Masino and board member Gilbert Dávila at the annual meeting set for Nov. 20. At the time, proxy advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis backed parts of Biglari's proposals.

Masino survived the shareholder vote, according to Cracker Barrel's post-meeting disclosure last week. Shareholders voted to elect nine of its 10 nominees to the board. Dávila resigned from the board, reducing the bench to 9 from 10.

In a statement, Biglari hit back, saying that“Masino has no credibility with customers or retail stockholders” and that retail investors overwhelmingly voted to remove her. It expects the company's downward trend to continue.

CEO Weighs In

In an interview with Fox News last week, Masino said she felt as though she was "fired by America" over the logo change.

"We're sorry that that's what people feel," Masino said. "That was not the intent... Our job is to make people love Cracker Barrel the way that our guests do, right? And so, even trying to invite new people in, it was always about how do we show them the magic that is Cracker Barrel."

On Stocktwits, the retail sentiment for CBRL fluctuated significantly in August and September, and has risen broadly since. It oscillated between 'extremely bullish' and 'bullish' over the past week.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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