News

Panera Bread Q3 earnings build on leading edge

October 26, 2010

Panera Bread's systemwide same-store sales for the company's third quarter, ended Sept. 28, have increased 6.9 percent. Company-owned comps increased 5.5 percent when compared to the same quarter last year, while franchise-operated comps increased 7.9 percent.

The comps growth has been partially attributed to a transaction increase of 0.2 percent and a 5.3 percent rise in  check average, brought about by a 2 percent increase in retail prices and a 3.3 percent benefit from selling higher priced goods.

The increases mark a 9.6 percent two-year rise in systemwide same-store sales, reflected in an 8.7 percent two-year increase for company-owned locations and a 10.3 percent increase over the same period for franchised stores.

For the 13-week period, revenue increased 11 percent to $372 million, up from $335 million reported for the same period last year. For the 39 weeks ended Sept. 28, revenue increased 13 percent to $1.1 billion, up from $987 million reported in Q3 2009.

The company also reported for the third quarter a net income increase of $23 million, or $0.75 per diluted share. The third quarter results are compared to a net income of $19 million, or $0.61 per diluted share, for the third quarter ended Sept. 29, 2009. The numbers represent a 23 percent year-over-year increase in diluted earnings per share.

For the first 39 weeks of 2010, net income was $75 million, or $2.42 per diluted share, compared with a net income of $56 million, or $1.82 per diluted share, for the thirty-nine weeks ended Sept. 29, 2009, a 33 percent increase.

During the third quarter of fiscal 2010, the company opened 10 new bakery-cafes and its franchisees opened 12 new bakery-cafes. As a result, there are now 1,421 bakery-cafes open systemwide as of Sept. 28.

Average weekly sales for company-owned units in the third quarter was $39,990, compared to $36,930 in the third quarter of fiscal 2009. AWS for franchise-operated new units in the third quarter of fiscal 2010 was $36,643 compared to $35,133 in the third quarter of fiscal 2009.

Year-to-date, average weekly sales for company-owned new units was $40,950 compared to $37,068 in the same period last year. AWS for franchise-operated new units year-to-date through the third quarter of fiscal 2010 was $37,719 compared to $35,680 in the same period of fiscal 2009.

On Sept. 29, 2010, the company completed the purchase of substantially all the assets and certain liabilities of 37 bakery-cafes owned by its New Jersey franchisee. The company's results for the third quarter of fiscal 2010 were not impacted by the purchase as the acquisition was completed following the close of the quarter, according to its earnings report.

Q4 outlook

For the fourth quarter of fiscal 2010, the company is raising its target for earnings per diluted share to $1.15 to $1.17 versus $0.95 per diluted share in the fourth quarter of fiscal 2009.

The company also expects the acquisition of its New Jersey bakery-cafes to have only a minimal impact on its fourth quarter earnings as a result of integration and transaction costs associated with the acquisition.

The range for the company's fourth quarter company-owned same-store sales remains targeted at 4.0 percent to 6.0 percent. The two year company-owned comps target is 11.3 percent to 13.3 percent. The assumptions underlying the growth targets are transaction increases of 1.0 percent to 3.0 percent and average check growth of approximately 3.0 percent.

Systemwide same-store sales in the first 27 days of the fourth quarter were up approximately 4.9 percent. Company-owned comps were up approximately 4.4 percent, while franchise-operated comps were up approximately 5.4 percent. The company expects its comparable sales to accelerate in November and December given an increased sequential media spend and the rollout of its loyalty program in company-owned locations.

Panera Bread's CEO Bill Moreton said the company's growth in 2011 will be fueled by an increase in transactions contributed by an increase in ad spend and a new loyalty program.

The company launched the MyPanera loyalty program earlier this year that has rolled out to all company-owned locations. The program is expected to be implemented systemwide by the end of 2010.