HIGHLIGHTS
- 35 new bakery-cafes opened in the third quarter bringing system-wide
bakery-cafes open to 1,168
- Fourth quarter 2007 diluted EPS target set at $0.53 to $0.59
- Initial target for fiscal 2008 diluted EPS growth established at 10% to
20%
ST. LOUIS, Oct. 23 /PRNewswire-FirstCall/ -- Panera Bread Company
(Nasdaq: PNRA) today reported net income of $12 million, or $0.37 per
diluted share, for the third quarter ended September 25, 2007, compared to
net income of $11 million, or $0.34 per diluted share, for the third
quarter ended September 26, 2006. For the thirty-nine weeks ended September
25, 2007, net income was $40 million, or $1.23 per diluted share, compared
to $40 million, or $1.25 per diluted share, for the thirty-nine weeks ended
September 26, 2006.
The Company's third quarter and year-to-date fiscal 2007 consolidated
statements of operations and margin analysis are attached as Schedule I.
The following tables set forth, for the periods indicated, certain items
included in the Company's consolidated statements of operations (in
thousands, except per share data and percentages), and reflects an
adjustment to the third quarter revenues released on October 3, 2007:
For the 13 Weeks Ended Percentage
September 25, 2007 September 26, 2006 Change
Total revenue $273,213 $204,954 33%
Net income $11,943 $10,879 10%
Diluted earnings per share $0.37 $0.34 9%
Shares used in diluted EPS 32,163 31,961
For the 39 Weeks Ended Percentage
September 25, 2007 September 26, 2006 Change
Total revenue $765,847 $596,059 28%
Net income $39,622 $39,943 -1%
Diluted earnings per share $1.23 $1.25 -2%
Shares used in diluted EPS 32,210 32,012
Third Quarter 2007 Key Metrics & Business Review
During the third quarter of 2007, system-wide comparable bakery-cafe
sales increased 2.6% (3.4% Company-owned and 2.1% franchise-operated).
System-wide average weekly sales decreased by 0.1% to $38,051 ($37,136
Company-owned and $38,711 franchise-operated), while system-wide operating
weeks in the third quarter totaled 14,931 (6,254 Company-owned and 8,677
franchise-operated).
During the third quarter of 2007, the Company opened 35 new
bakery-cafes system-wide (19 Company-owned and 16 franchise-operated) and
closed two bakery-cafes system-wide (one Company-owned and one
franchise-operated).
As of September 25, 2007, there were 1,168 bakery-cafes open system-wide.
The breakdown of bakery-cafes between Company-owned and franchise-operated is
as follows:
Company-owned Franchise-operated Total System
Bakery-cafes as of
June 26, 2007 475 660 1,135
Bakery-cafes opened 19 16 35
Bakery-cafes closed (1) (1) (2)
Bakery-cafes as of
September 25, 2007 493 675 1,168
During the third quarter of 2007, earnings per diluted share were $0.37
compared to $0.34 per diluted share in the third quarter of 2006. Panera
experienced margin contraction in the third quarter of 2007 resulting from:
first, a mix shift both away from soups and sandwiches to higher food cost
salads and away from self-manufactured bread and bagels; secondly, product
ingredient costs which rose more rapidly than prices; and thirdly, labor
costs which rose more rapidly than sales as the Company invested additional
labor at lunch to improve the customer experience. Also included in the
Company's third quarter 2007 results was a tax benefit of $0.05 per diluted
share reflecting the resolution of a certain tax matter.
Fourth Quarter 2007 Business Outlook
The Company is today setting an earnings per diluted share target for
the fourth quarter of 2007 of $0.53 to $0.59. The fourth quarter 2007
target assumes system-wide comparable bakery-cafe sales growth of 1.0% to
3.5% (including the price increase of approximately 2.5% which the Company
will be taking on November 14, 2007) and system-wide average weekly sales
of $39,700 to $40,700. Based upon 27 days of actual sales data for
Company-owned bakery-cafes and 21 days of actual sales data for
franchise-operated bakery-cafes, the Company is also today projecting that
system-wide comparable bakery-cafe sales growth for the four weeks ended
October 23, 2007 will be 0.3% to 0.6%. Additionally, bakery-cafe openings
are forecasted to be 60 to 65 system-wide in the fourth quarter (39 to 41
Company-owned and 21 to 24 franchise-operated), resulting in expected
system-wide operating weeks in the fourth quarter of 2007 of 15,450 to
15,500.
2008 Business Outlook
The Company today is establishing its initial growth target for fiscal
2008 earnings per diluted share at 10% to 20%. The assumptions on key
metrics underlying the 2008 target are new bakery-cafe development of 160
to 175, approximately the same as in fiscal 2007, system-wide comparable
bakery-cafe sales growth of 1% to 4%, system-wide average weekly sales of
$38,400 to $39,600, and system-wide operating weeks of 68,000 to 68,500.
Chairman and Chief Executive Officer Ron Shaich commented: "Despite
operating in a very uncertain consumer and cost environment, our concept
remains strong as evidenced by our industry leading customer satisfaction
ratings, high unit volumes and resulting strong bakery-cafe return on
investment. These factors speak to our potential for future growth. Having
said that we also recognize the challenges experienced in the past year. As
a result, we have charted a clear plan to overcome existing margin
compression while maintaining transactions and we've begun to make some
encouraging progress. We are looking forward to making further progress and
returning to our record of strong earnings growth."
The Company will discuss third quarter 2007 results and preliminary
comparable bakery-cafe sales results for the four weeks ended October 23,
2007 in a conference call that will be broadcast on the Internet at 8:30
A.M. Eastern Daylight Time on Wednesday, October 24, 2007. To access the
call or view a copy of this release, go to
http://www.panerabread.com/investor. Access to the call and the release
will be archived for one year.
2008 Financial Reporting
A schedule of preliminary earnings release dates for fiscal year 2008
is attached as Schedule II. Beginning in fiscal year 2008, the Company will
no longer issue monthly sales releases but rather will include this
information, along with its quarterly sales release, in its quarterly
earnings release. This change is being made to conform to reporting
frequencies commonly followed by many of its peers.
Included above are franchise-operated and system-wide comparable
bakery-cafe sales percentages. System-wide sales is a non-GAAP financial
measure which includes sales at all Company-owned bakery-cafes and
franchise-operated bakery-cafes, as reported by franchisees. Management
uses system-wide sales information internally in connection with store
development decisions, planning, and budgeting analyses. Management
believes system-wide sales information is useful in assessing consumer
acceptance of the Company's brand and facilitates an understanding of
financial performance as the Company's franchisees pay royalties and
contribute to advertising pools based on a percentage of their sales.
Panera Bread Company owns and franchises 1,115 bakery-cafes under the
Panera Bread(R) and Saint Louis Bread Co.(R) names as of September 25,
2007. With its identity rooted in handcrafted, fresh-baked, artisan bread,
Panera Bread is committed to providing great tasting, quality food that
people can trust. Highlighted by antibiotic free chicken, whole grain
bread, select organic and all-natural ingredients and a menu free of
man-made trans fat, Panera's bakery-cafe selection offers flavorful,
wholesome offerings. The menu includes a wide variety of year-round
favorites, complemented by new items introduced seasonally with the goal of
creating new standards in everyday food choices. In neighborhoods across
the country, guests are enjoying Panera's warm and welcoming environment
featuring comfortable gathering areas, relaxing decor, and free internet
access provided through a managed WiFi network. At the close of each day,
Panera Bread bakery-cafes donate bread and baked goods to community
organizations in need. Additional information is available on the Company's
website, http://www.panerabread.com. Panera also holds a 51% interest in
Paradise Bakery & Cafe, Inc., owner and franchisor of 53 bakery-cafes as of
September 25, 2007.
Matters discussed in this news release, including any discussion or
impact, express or implied, on the Company's anticipated growth, operating
results, and future earnings per share, contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These statements are often
identified by the words "believe", "positioned", "estimate", "project",
"target", "continue", "intend", "expect", "future", "anticipates", and
similar expressions. All forward-looking statements included in this
release are made only as of the date of this release, and we do not
undertake any obligation to publicly update or correct any forward-looking
statements to reflect events or circumstances that occur or which we
hereafter become aware, after that date. Forward-looking information
expresses management's present belief, expectations, or intentions
regarding the Company's future performance. The Company's actual results
could differ materially from those set forth in the forward-looking
statements due to known and unknown risks and uncertainties and could be
negatively impacted by a number of factors. These factors include, but are
not limited to, the following: inability to execute our growth strategy,
including, among other things, variations in the number, timing, and
successful nature of Company-owned and franchise-operated bakery-cafe
openings and continued successful operation of bakery-cafes; failure to
comply with government regulations; loss of a member of senior management;
inability to recruit qualified personnel; failure or inability to protect
our brand, trademarks, or other proprietary rights; competition; rising
insurance costs; disruption in our supply chain or increases in ingredient,
product, or other supply costs; disruptions or supply issues in our fresh
dough facilities; health concerns about the consumption of certain
products; complaints and litigation; risks associated with the acquisition
of franchise-operated bakery-cafes; other factors, some of which may be
beyond our control, effecting our operating results; and other factors that
may affect restaurant owners or retailers in general. These and other risks
are discussed from time to time in the Company's SEC reports, including its
Form 10-K for the year ended December 26, 2006 and its quarterly reports on
Form 10-Q.
Schedule I
PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share amounts)
For the 13 Weeks Ended
September 25, September 26,
2007 2006
Revenues:
Bakery-cafe sales $232,244 $165,098
Franchise royalties and fees 16,286 15,134
Fresh dough sales to franchisees 24,683 24,722
Total revenue 273,213 204,954
Costs and expenses:
Bakery-cafe expenses:
Cost of food and paper products 75,037 49,987
Labor 75,545 52,122
Occupancy 18,580 12,278
Other operating expenses 32,487 24,619
Total bakery-cafe expenses 201,649 139,006
Fresh dough cost of sales to franchisees 20,137 20,333
Depreciation and amortization 14,990 11,325
General and administrative expenses 18,412 16,593
Pre-opening expenses 1,908 1,457
Total costs and expenses 257,096 188,714
Operating profit 16,117 16,240
Interest expense 28 4
Other (income) expense, net (145) (896)
Income before minority interest and income
taxes 16,234 17,132
Minority interest (income) expense (312) -
Income before income taxes 16,546 17,132
Income taxes 4,603 6,253
Net income $11,943 $10,879
Basic net income per share $0.38 $0.35
Diluted net income per share $0.37 $0.34
Shares used in calculation of basic EPS 31,812 31,338
Shares used in calculation of diluted EPS 32,163 31,961
Schedule I (continued)
PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share amounts)
For the 39 Weeks Ended
September 25, September 26,
2007 2006
Revenues:
Bakery-cafe sales $638,988 $477,329
Franchise royalties and fees 49,555 44,948
Fresh dough sales to franchisees 77,304 73,782
Total revenue 765,847 596,059
Costs and expenses:
Bakery-cafe expenses:
Cost of food and paper products 200,157 141,944
Labor 205,405 147,577
Occupancy 50,473 34,797
Other operating expenses 87,807 67,138
Total bakery-cafe expenses 543,842 391,456
Fresh dough cost of sales to franchisees 63,574 62,849
Depreciation and amortization 42,387 32,050
General and administrative expenses 52,928 45,441
Pre-opening expenses 4,687 3,941
Total costs and expenses 707,418 535,737
Operating profit 58,429 60,322
Interest expense 199 10
Other (income) expense, net (731) (2,591)
Income before minority interest and income
taxes 58,961 62,903
Minority interest (income) expense (120) -
Income before income taxes 59,081 62,903
Income taxes 19,459 22,960
Net income $39,622 $39,943
Basic net income per share $1.25 $1.28
Diluted net income per share $1.23 $1.25
Shares used in calculation of basic EPS 31,684 31,275
Shares used in calculation of diluted EPS 32,210 32,012
Schedule I (continued)
PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
MARGIN ANALYSIS
(unaudited)
The following table sets forth the percentage relationship to total
revenues, except where otherwise indicated, of certain items included in
the Company's consolidated statements of operations for the period
indicated. Percentages may not add due to rounding:
For the 13 Weeks Ended
September 25, September 26,
2007 2006
Revenues:
Bakery-cafe sales 85.0 % 80.5 %
Franchise royalties and fees 6.0 7.4
Fresh dough sales to franchisees 9.0 12.1
Total revenue 100.0 % 100.0 %
Costs and expenses:
Bakery-cafe expenses (1):
Cost of food and paper products 32.3 % 30.3 %
Labor 32.5 31.6
Occupancy 8.0 7.4
Other operating expenses 14.0 14.9
Total bakery-cafe expenses 86.8 84.2
Fresh dough cost of sales to
franchisees (2) 81.6 82.2
Depreciation and amortization 5.5 5.5
General and administrative expenses 6.7 8.1
Pre-opening expenses 0.7 0.7
Total costs and expenses 94.1 92.1
Operating profit 5.9 7.9
Interest expense - -
Other (income) expense, net (0.1) (0.4)
Income before minority interest and income
taxes 6.0 8.4
Minority interest (income) expense (0.1) -
Income before income taxes 6.1 8.4
Income taxes 1.7 3.1
Net income 4.4 % 5.3 %
(1) As a percentage of Company bakery-cafe sales.
(2) As a percentage of fresh dough sales to franchisees.
Schedule I (continued)
PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
MARGIN ANALYSIS
(unaudited)
The following table sets forth the percentage relationship to total
revenues, except where otherwise indicated, of certain items included in
the Company's consolidated statements of operations for the period
indicated. Percentages may not add due to rounding:
For the 39 Weeks Ended
September 25, September 26,
2007 2006
Revenues:
Bakery-cafe sales 83.4 % 80.1 %
Franchise royalties and fees 6.5 7.5
Fresh dough sales to franchisees 10.1 12.4
Total revenue 100.0 % 100.0 %
Costs and expenses:
Bakery-cafe expenses (1):
Cost of food and paper products 31.3 % 29.7 %
Labor 32.1 30.9
Occupancy 7.9 7.3
Other operating expenses 13.7 14.1
Total bakery-cafe expenses 85.1 82.0
Fresh dough cost of sales to
franchisees (2) 82.2 85.2
Depreciation and amortization 5.5 5.4
General and administrative expenses 6.9 7.6
Pre-opening expenses 0.6 0.7
Total costs and expenses 92.4 89.9
Operating profit 7.6 10.1
Interest expense - -
Other (income) expense, net (0.1) (0.4)
Income before minority interest and income
taxes 7.7 10.6
Minority interest (income) expense - -
Income before income taxes 7.7 10.6
Income taxes 2.5 3.9
Net income 5.2 % 6.7 %
(1) As a percentage of Company bakery-cafe sales.
(2) As a percentage of fresh dough sales to franchisees.
Schedule II
PANERA BREAD COMPANY
EARNINGS PRESS RELEASE DATES
For the Quarter Ended Press Release Date (After Market Closes)
March 25, 2008 April 22, 2008
June 24, 2008 July 22, 2008
September 23, 2008 October 21, 2008
SOURCE Panera Bread Company
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Related links:
http://www.panerabread.com
CONTACT:
Jeff Kip, Senior Vice President, Chief
Financial Officer of Panera Bread Company, +1-314-633-7289
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