Panera Bread Shares Down 3% On Weak Outlook, But Q3 Profit Rises 17%

(RTTNews) - Shares of Panera Bread Co. (PNRA) declined three percent in extended trading on Tuesday after the retail bakery-cafes operator lowered its earnings guidance for the fourth quarter and the full-year 2013.

However, the company reported a profit for the third quarter increased 17 percent from last year, reflecting improved comparable net bakery-cafe sales. Adjusted earnings per share matched analysts expectations, quarterly revenues missed their estimates.

"Panera generated the highest system wide year-to-date average weekly sales in its history. Indeed, average weekly sales at Panera through this quarter are up over 20% over the last 5 years. As well, new cafes in the class of 2013 generated sales volumes that are among the highest in our history," CEO Ron Shaich said in a statement.

St. Louis, Missouri-based Panera Bread posted net income of $42.76 million or $1.48 per share for the third quarter, up from $36.52 million or $1.24 per share in the prior-year quarter.

Excluding favorable tax-related adjustments of $0.13 per share, adjusted net income for the latest quarter was $38.93 million or $1.35 per share. On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $1.35 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased 8 percent to $572.48 million from $529.34 million in the same quarter last year, but missed twenty-four Wall Street analysts' consensus estimate of $584.19 million.

In the third quarter, system-wide comparable net bakery-cafe sales grew 1.3 percent, with company-owned comparable net bakery-cafe sales rising 1.7 percent, and franchise-operated comparable net bakery-cafe sales improving 0.9 percent over a year earlier.

"While these comparable store sales continue to be above average for the industry, they are below our expectations. As one might expect, our recent comp performance has led to a great deal of self-examination and a thorough review of how we compete and how we operate our business," Shaich added.

Bakery-cafe sales increased 8 percent to $505 million, which makes 88.3 percent of total revenues, and franchise royalties and fees rose 7 percent to $27 million. Fresh dough and other product sales to franchisees also grew 6 percent to $40 million over last year.

Operating margin for the quarter remained flat with last year at 11.3 percent, as costs and expenses as a percentage of total revenues also remained flat.

During the third quarter the company opened 17 new bakery-cafes and its franchisees opened 15 new bakery-cafes, and ended the quarter with 1,736 bakery-cafes system-wide.

Looking ahead to the fourth quarter, Panera Bread trimmed its earnings guidance to a range of $1.91 to $1.97 per share from the prior outlook of $2.05 to $2.11 per share. Analysts' estimate earnings of $2.08 per share.

For fiscal 2013, the company also lowered its earnings outlook to a range of $6.77 to $6.83 per share from its prior forecast of $6.89 to $7.01 per share. Street is currently looking for full-year 2013 earnings of $6.81 per share.

The company also provided initial earnings guidance, targeting earnings growth below the low-end of the long-term growth target of 15 to 20 percent, with analysts currently estimating earnings of $7.81 per share.

PNRA closed Tuesday's regular trading session at $162.44, down $0.32 or 0.20% on a volume of 2.48 million shares. The stock declined $4.95 or 3.05% in after-hours trading.