Panera Bread Co.
) first-quarter 2013 adjusted earnings of $1.59 per share fell
shy of the Zacks Consensus Estimate of $1.65 by 3.6% but
increased 13.6% from the year-ago- earnings per share. On a
reported basis, including the benefit from resolution of legal
and tax matters, earnings were $1.64 per share, up 17% year over
year. Earnings were driven by improved top-line and operating
Quarter in Detail
The restaurant chain's total revenue escalated 13% year over
year to $561.8 million in the first quarter but lagged the Zacks
Consensus Estimate of $568.0 million. Increases in all categories
including company-owned bakery-cafe revenues, franchise royalties
and sales of fresh dough to franchisees helped drive revenues in
System-wide comparable net bakery-cafe sales in the quarter
increased 3.3% driven by a 3.3% increase both at company-owned
units and franchised-operated units. The comps fell short of the
company's guided range of 4%-5%. Muted growth in comps can be
attributed to 2.4% decline in transaction in the quarter.
Comps were worst hit in the month of February with only 0.8%
rise. Adverse weather throughout the United States in February
and March particularly in the Midwest, which marred Panera's St.
Louis market, led to a 100 to 150 basis points of unfavorable
impact on the quarter results.
The company's operating margin increased 10 basis points
backed by better margins on fresh dough and other product sales
to franchisees as well as lower operating expenses.
During the quarter, Panera opened 10 new company-owned
bakery-cafes and 12 franchised bakery-cafes. For 2013, the
company maintains its target of unveiling approximately 115-125
In the first quarter, Panera bought back 0.12 million shares
for $20 million, leaving $560 million under its existing $600
million repurchase authorization. However, the activity had
minimal impact on earnings per share in the quarter.
New Sole CEO
Following the transition of co-CEO (chief operating officer)
Bill Moreton to Executive Vice Chairman effective Aug 1, 2013,
present chairman and co-CEO Ron Shaich will again serve as
Panera's sole CEO.
Shaich is Panera's founder and has worked before as a sole-CEO
from May 1994 to May 2010.
Panera expects earnings to be in the range of $1.74-$1.78 per
share for the second quarter of 2013, reflecting 16%-19% growth.
The company anticipates second quarter company-owned comparable
sales in the range of 4%-5%. Panera already announced that comps
at company-owned units in the first 27 days of the second quarter
fiscal 2013 were up approximately 5.0%. It is targeting operating
margin improvement of 25 to 75 basis points.
For full-year 2013, Panera continues to expect earnings per
share to grow in the range 17-19% year over year. However,
management slashed its aim to achieve company-owned comparable
net bakery-cafe sales growth from the range of 4.5%-5.5% to the
range of 4.0%-5.0% for fiscal 2013 to reflect lower-than-expected
first quarter comps. The company reiterated flat- to 50 basis
points increase in operating margin for fiscal 2013.
Failure to hit estimates on both counts, a reduced guidance
for same-store sales and decline in transactions over the last
two quarters put Panera a step behind this earnings season. Stiff
competition and overall tepid macroeconomic outlook, which might
affect footfall at the restaurants, are expected to remain
headwinds in the coming quarters.
However, the reiteration of full-year earnings guidance even
after a soft first-quarter brings a ray of hope for this Zacks
Rank #3 (Hold) stock.
Some other restaurateurs like
) missed our estimates on both lines this season while
Yum! Brands Inc.
) beat on
earnings but missed out on revenues.
The Cheesecake Factory Inc.
was ahead of estimates on both counts.
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