Panera Bread (PNRA) Plunges On a Downward Guidance Revision
Panera Bread Company (PNRA), which investors consider a promising, high-growth restaurant stock, reported mixed second quarter earnings that showed slower growth than in the prior year quarter. Panera earned $1.74 per share, or $51 million, up from $1.50 per share in a year ago. Revenue rose 11% to $589 million as same-store sales increased 3.7%. Although Panera's results are very strong for a casual dining restaurant, it lowered its full year earnings and same-store sales guidance. Daily Chart
Panera lowered its 2013 earnings per share forecast to a range between $6.75 to $6.85, down from a previously guided range between $6.91 to $7.03. Same-store sales are now expected to come in between 3% to 5%, a slight decrease from the 4% to 5% growth it had previously forecast. CFO Roger Matthews commented, "Our same-store sales growth was below our expectations. It is our intention to return to a greater premium on the industry and sustain that premium." Co-CEO and founder Ronald M. Shaich noted that lower same-store sales during breakfast were notably lower than its sales after 2 p.m., which rose 5% year-on-year. Shaich stated that the afternoon and evening gain was primarily attributed to its introduction of pasta items in February, which has proven popular with customers despite higher prices. Shaich also pointed out that much of Panera's marketing has been focused on promoting its afternoon and evening products. In addition, major players in the fast food industry - including McDonald's (MCD
), Yum! Brands (YUM
), Jack in the Box (JACK
) and Burger King (BKW
) - have rolled out increasingly creative breakfast items (such as Taco Bell's Waffle Taco) which have saturated the marketplace. To boost demand for Panera's breakfast items, the company is rolling out a new power breakfast sandwich during the third quarter. Panera remains committed to its slogan, "Live Consciously, Eat Deliciously," to emphasize its position as a healthier alternative to other fast food restaurants. It is also focusing on lighter fare, such as half-sandwiches. "Expect to see a number of smaller, lighter, less expensive products added to our menu in 2014," Shaich stated. Panera's loyalty program's numbers rose from 11 million to 14.5 million users in the second quarter. Over half of all purchases are made through its loyalty program, MyPanera. The company intends to use special loyalty programs for breakfast items, in an effort to boost its lagging breakfast sales. Panera is also still growing steadily, adding 18 new company-owned locations and 19 new franchised ones during the quarter, bringing its total store count up to 1,700. Shares of Panera Bread currently trade at 21.5 times forward earnings with a 5-year PEG ratio of 1.4. The stock, signifying reasonable growth ahead, although the stock trades at a premium to its industry competitors. The company does not currently pay a dividend. Other News About PNRA New Panera Bread Features Drive-Thru
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Published on Aug 1, 2013
By Leo Sun