News

Panera Bread reports Q1 comps, average check increases

April 24, 2012

Panera Bread Company released its earnings report for the first quarter ended March 27, 2012.

Highlights for the quarter include:   

• Company-owned comparable net bakery-cafe sales up 7.5 percent
• Revenue increased 18% to $499 million
• Q2 2012 EPS target set at $1.40 to $1.43 (up 19 percent to 21 percent versus Q2 2011)
• FY 2012 EPS target increased to $5.58 to $5.63 (up 23 percent to 24 percent versus FY 2011)

Revenue for the quarter increased to $499, up from $422 million recorded for the same period last year.

Net income for the quarter increased 28 percent to $41 million, or $1.40 per diluted share, compared to net income of $33 million, or $1.09 per diluted share, for the fiscal first quarter ended March 29, 2011.

Same-store sales and unit development

In the first quarter of fiscal 2012, company-owned same-store sales increased 7.5 percent, while franchise-operated comps increased 5.2 percent. Combined, the company reported a 6.3 percent comps increase when compared to the same period last year.

The increase of 7.5 percent was comprised of year-over-year transaction growth of 2.1 percent and average check growth of 5.4 percent. Average check growth was comprised of retail price increases of approximately 3.5 percent and positive mix impact of approximately 1.9 percent.

During the first quarter of fiscal 2012, the company opened seven new bakery-cafes and its franchisees opened 15 new bakery-cafes. As a result, there were 1,562 bakery-cafes open system-wide as of March 27, 2012. Additionally, subsequent to the first fiscal quarter, on March 28, 2012, the company completed the purchase of substantially all the assets and certain liabilities of 16 bakery-cafes from its Raleigh-Durham, N.C., franchisee.

Average weekly sales for company-owned new units through the first quarter of fiscal 2012 were $51,331, compared to $49,551 in the same period of fiscal 2011. AWS for franchise-operated new units through the first quarter of fiscal 2012 were $47,982, compared to $45,532 in the same period of fiscal 2011.

Operating margin

In the first quarter of fiscal 2012, the company generated operating margin improvement of approximately 90 basis points compared to the first quarter of fiscal 2011. This operating margin improvement was driven by improved bakery-cafe margins and lower general and administrative expenses related to long-term compensation expenses. These improvements were partially offset by lower margins in fresh dough and other product sales to franchisees resulting from higher year-over-year wheat costs.

Q2 Target

For the second quarter of fiscal 2012, the company is targeting earnings per diluted share of $1.40 to $1.43, versus $1.18 per diluted share in the second quarter of fiscal 2011.

The second quarter of fiscal 2012 diluted earnings per share target includes the following key assumptions:

• Company-owned same-store sales growth of 4.5 percent to 5.5 percent.
• Average transaction growth of 0.0 percent to 0.5 percent and average check growth of approximately 4.5 percent to 5.0 percent, consisting of a year-over-year price increase of approximately 3.0 percent and mix impact on check growth of 1.5 percent to 2.0 percent.
• An operating margin improvement by 25 to 50 basis points on a year-over-year basis.

Fiscal 2012 Outlook

The company is now targeting fiscal 2012 earnings per diluted share of $5.58 to $5.63. This earnings target includes the $0.02 to $0.03 favorable impact from its acquisition of the Raleigh-Durham market.

The company also now expects to be at the high-end of its previously targeted comparable net comps growth range of 4.5 percent to 5.5 percent for fiscal 2012. This target assumes transaction growth of 0.5 percent to 1.0 percent and average check growth from mix of approximately 4.0 percent to 4.5 percent on average year-over-year pricing of approximately 3.0 percent and positive mix impact of 1.0 percent to 1.5 percent.

The company expects approximately 115-120 system-wide new unit openings in fiscal 2012. The average weekly net sales performance for new company-owned units remains at $40,000 to $42,000 for fiscal 2012.

"This marks the eighth out of the last nine quarters that our earnings have grown at a rate of 20 percent or greater. The momentum from our strong first quarter results and our continued intense focus on investing in the quality of our food, people and overall customer experience gives us the confidence to target full year fiscal 2012 earnings slightly above the high-end of our long-term range of 15-20 percent annual earnings growth," said Bill Moreton, Panera Bread president and co-CEO.

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