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Panera Bread Shares Down 6% As Q1 Results Miss View, Backs 2013 Outlook

Shares of Panera Bread Co. (PNRA) slipped more than six percent in extended trading on Tuesday after the retail bakery-cafes operator reported results for the first quarter that missed analysts' expectations. The company also provided earnings outlook for the second quarter, in line with Street view, and maintained its earnings growth guidance for the full-year 2013.

"We are pleased to report 17% EPS growth in the first quarter of 2013 despite inclement weather that impacted Panera as well as the overall restaurant industry," Chairman and Co-CEO Ron Shaich said in a statement.

Separately, the company announced that Shaich will become the sole CEO of the company again, effective August 1, 2013. Shaich is Panera's founder and longtime CEO, having served as sole CEO previously from May 1994 to May 2010.

Meanwhile, Co-CEO Bill Moreton will transition to executive vice chairman as he wants to spend increased amounts of time on a family matter. However, Moreton intends to remain actively involved in management of company.

St. Louis, Missouri-based Panera Bread posted net income of $48.12 million, or $1.64 per share for the first quarter, up 17 percent from $41.18 million, or $1.40 per share in the prior-year quarter.

On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $1.65 per share for the first quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased 13 percent to $561.78 million from $498.58 million in the same quarter last year, but missed twenty-four Wall Street analysts' consensus estimate of $566.30 million by a whisker.

In the first quarter, system-wide comparable net bakery-cafe sales grew 3.3 percent, with company-owned comparable net bakery-cafe sales rising 3.3 percent, and franchise-operated comparable net bakery-cafe sales improving 3.3 percent over a year earlier.

Bakery-cafe sales increased 17 percent to $498 million, which makes 88.6 percent of total revenues, and franchise royalties and fees rose 7 percent to $27 million. Fresh dough and other product sales to franchisees also grew 9 percent to $38 million over last year.

Operating margin for the quarter improved about 10 basis points to 13.6 percent, primarily driven by improved margins from fresh dough and other product sales to franchisees as well as lower general and administrative expenses as a percentage of total revenues.

During the first quarter the company opened 10 new bakery-cafes and its franchisees opened 12 new bakery-cafes, and ended the quarter with 1,673 bakery-cafes system-wide.

Looking ahead to the second quarter, Panera Bread expects earnings in a range of $1.74 to $1.78 per share. Analysts' estimate earnings of $1.78 per share.

For fiscal 2013, the company continues to project year-over-year earnings per share growth in a range of 17 to 19 percent, implying earnings in the range of $6.89 to $7.01 per share, based on earnings of $5.89 reported for fiscal 2012. Street is currently looking for full-year 2013 earnings of $7.07 per share.

"We believe we are in a strong position to hit our 2013 EPS targets. In addition, we are confident that the substantial investments we are making in food, marketing, catering and operational improvements will lay the foundation for our success over the next 3 to 5 years," Shaich added.

PNRA closed Tuesday's regular trading session at $180.44, up $1.29 or 0.72% on a volume of 1.65 million shares. However, the stock plunged $11.44 or 6.34% in after-hours trading.

by RTT Staff Writer

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