Panera ups 2010 outlookPanera ups 2010 outlook

Alan J. Liddle

Panera Bread Co. raised its full-year fiscal 2010 outlook on Tuesday after reporting a 33-percent jump in net income for the second quarter, and a 14-percent jump in revenue from increased same-store sales and the addition of new locations.

For the quarter ended June 29, Panera earned $26.7 million, or 85 cents per share, compared with income of $20 million, or 65 cents a share, in the same quarter a year ago.

The Richmond Heights, Mo.-based operator and franchisor of fast-casual bakery-café restaurants said its latest quarter net income was favorably impacted by 1 cent per share from the company’s repurchase of 897,556 shares of stock. Earnings were also reduced by 5 cents a share from an ongoing unclaimed property audit.

Second-quarter revenue climbed 14 percent to $378.1 million, on the strength of systemwide same-store growth of 9.9 percent and a 4-percent rise in total system restaurants. The company ended the quarter with 1,399 units, including 595 corporate restaurants and 804 franchised locations, versus 1,345 locations a year earlier.

Panera noted that a 9.6-percent increase in corporate same-store sales was driven by a 1.9-percent growth in the number of transactions, coupled with a 7.7-percent bump in average check. The average check increase was spurred by retail price increases of about 2.5 percent and a 5.2-percent improvement from product mix, the company said.

Panera officials said the leverage from increased same-store sales and increased purchasing efficiencies drove a 230-basis point, or 2.3 percent, year-over-year increase in operating margins at corporate restaurants during the second quarter.

For the 26 weeks ended June 29, Panera booked a 40-percent increase in net income, to $52.5 million, or $1.67 per share, up from $37.5 million, or $1.21 a share, for the first half of the preceding year. First half 2010 revenue increased 14 percent to $742.3 million.

The company said it now expects full-year earnings per share to total between $3.50 and $3.52, including a 6-cents-per-share favorable impact from stock repurchasing activities. The projection is a 2-percent to 3-percent increase from the company’s earlier guidance of earnings between $3.40 and $3.44 per share.

Panera also said it anticipates same-store sales at company restaurants to increase between 7 percent and 8 percent — up from previous expectations of between 6.5 percent and 7.5 percent — on forecasted transaction growth of between 1.5 percent and 2 percent, and improvement in the average check of between 5.5 percent and 6 percent.

Bill Moreton, Panera Bread’s chief executive, said the company has “increased our investments in marketing, operations and product development, which we believe will contribute to our medium- and longer-term success.”

He added, “As a result, we believe we will continue to be able to drive shareholder value and are targeting a long-term growth rate of 15 percent to 20 percent annually for the next 3 to 5 years.”

Contact Alan Liddle at [email protected].