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Panera Bread reports profit down 17.4% in 3Q

Panera Bread reports profit down 17.4% in 3Q

Company takes charges for refranchising, tax adjustments

Panera Bread Co. reported net income was down 17.4 percent for the third quarter ended Sept. 29 after charges for refranchising and tax adjustments, the company said Tuesday.

The St. Louis-based bakery-café chain reported profit of $32. 4 million, or $1.27 per share, compared to $39.2 million, or $1.46 per share, in the prior-year quarter. Revenue in the quarter was up 7.2 percent, to $664.7 million from $619.9 million in the same period last year.

Same-store sales at company-owned restaurants were up 3.8 percent in quarter. The company said that in the first 27 days of the fourth quarter, same-store sales were up 3.4 percent.

Ron Shaich, Panera’s chairman and CEO, said in a statement that management was “particularly pleased with these results in light of the slowing sales reported across the industry in October.”

Shaich added that "our initiatives to expand into several $1 billion-plus adjacent businesses, including catering, delivery and consumer-packaged goods, are also gaining traction.”

In the third quarter, the company converted 108 bakery-cafes to the so-called Panera 2.0 format, which includes enhanced technology and more emphasis on carry-out orders.

“Despite the high level of pressure on our near-term earnings related to the startup and transition costs associated with our strategic initiatives,” Shaich said, “the progress we see gives us increased confidence in our strategic plan and its ability to drive expanded earnings growth well into the future."

Sharon Zackfia, a securities analyst with William Blair & Co., earlier in late September noted that Panera Bread CFO Mike Bufano anticipated the Panera 2.0 initiative will increase the bakery-café chain’s accessibility to customers through catering, delivery and consumer packaged goods.

“Ultimately, management believes catering, delivery and CPG each hold the potential to be $1 billion businesses, vs. about $2.7 billion in total revenue estimated for Panera this year,” Zackfia wrote.

As of Sept. 29, Panera had 1,946 restaurants, with 931 of those owned and operated by the company and the remainder franchised.

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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