Panera Bread: 3Q/2009 earnings climb

St. Louis / MO. (pbc) Panera Bread Company reported that its profit for the third quarter 2009 increased from the previous year quarter helped by higher revenues and improved margins. Highlights:

• Company-owned comparable sales (calendar basis) up 6,9 percent in the first 27 days of Q4/2009.
• Franchise comparable sales (calendar basis) up 6,3 percent in the first 27 days of Q4/2009.
• Q3/2009 Company-owned comparable bakery-cafe sales up 3,3 percent over Q3/2008.
• Q3/2009 operating margin up 230 bps over Q3/2008.
• Q3/2009 net income up 38 percent over Q3/2008.
• Q4/2009 EPS target 0,85 USD to 0,87 USD (net of 0,05 USD of expected asset retirement expenses).
• FY 2010 EPS target set at 3,05 USD to 3,15 USD (up 14 percent to 18 percent versus target for FY 2009).

Panera Bread reported net income of 19 million USD or 0,61 USD per diluted share, for the third quarter ended September 29, 2009; which included the net impact of 0,04 USD per diluted share of nonrecurring charges resulting from unexpected expenses associated primarily with a state sales tax audit and an unexpected gain from the Company´s partial redemption of its investment in the Columbia Strategic Cash Portfolio. These results compare to net income of 14 million USD or 0,45 USD per diluted share for the third quarter ended September 23, 2008 and represent a 38 percent year-over-year increase in net income.

For the thirty-nine weeks ended September 29, 2009, net income was 56 million USD or 1,82 USD per diluted share. These results compare to net income of 42 million USD or 1,38 USD per diluted share for the thirty-nine weeks ended September 23, 2008 and represent a 35 percent year-over-year increase in net income.

Q3/2009 Comparable Bakery-Cafe Sales Growth

In the third quarter of fiscal 2009, Company-owned comparable bakery-cafe sales increased 3,3 percent versus the comparable period in fiscal 2008, increasing sequentially over the prior year in each fiscal monthly period in the third quarter of fiscal 2009 (2,6 percent, 3,0 percent, and 4,4 percent, respectively). Franchise-operated comparable bakery-cafe sales increased 2,5 percent and system-wide comparable bakery-cafe sales increased 2,8 percent versus the comparable period in fiscal 2008.

The Company-owned comparable bakery-cafe sales increase of 3,3 percent in the third quarter of fiscal 2009 included the following year-over-year components: transaction growth of 1,8 percent and average check growth of 1,5 percent. Average check growth in turn was comprised of retail price increases of approximately 2,25 percent and negative mix impact of approximately (0,75) percent.

In the third quarter of fiscal 2009, transaction growth and average check growth were fueled by new product introductions, investments in marketing and the improved strength of the catering business.

Operating Margin Improvement

In the third quarter of fiscal 2009, the Company generated operating margin improvement of approximately 230 basis points compared to the third quarter of fiscal 2008. This was primarily a result of sales leverage, year-over-year benefits from purchasing efficiencies and wheat and diesel fuel cost decreases.

New Unit AWS and Development

In the third quarter of fiscal 2009, average weekly sales («AWS») for Company-owned new units increased to 36’930 USD compared to 36’383 USD in the third quarter of fiscal 2008. AWS for Company-owned new units year-to-date through the third quarter of fiscal 2009 was 37’068 USD compared to 36’505 USD in the same period of fiscal 2008. During the third quarter of fiscal 2009, the Company and its franchisees opened 19 new bakery-cafes system-wide, resulting in 1’362 bakery-cafes open system-wide as of the end of the third quarter of fiscal 2009.

Chairman and Chief Executive Officer Ron Shaich: «Over the last several quarters, we have spoken about our commitment to invest in our business to benefit the customer and to utilize the recession to build competitive advantage. We believe our 35 percent EPS growth in Q3 and the strength of our comparable bakery-cafe sales (up 6,9 percent on a calendar basis Q4 to date), as well as our positive transaction growth, proves that this strategy is working and that we are indeed taking market share from our competitors. The result is that we are now more confident than ever of our capacity to generate significant earnings growth in Q4/2009, 2010 and beyond».

Info: «Fourth Quarter 2009 Outlook and 2010 Business Outlook» (Diluted EPS Target; Comparable Bakery-Cafe Sales Growth; Operating Margin Improvement; New Unit AWS and Development) and «Full Year 2010 Targets» are announced in the complete press release (PDF, twelve pages, 66 KB).