RICHMOND HEIGHTS Mo. Panera Bread Co. reported this week a 10-percent jump in its third-quarter net income, to $11.9 million, on a 33-percent jump in revenue from a year ago to $273.2 million. Margin pressure, however, led the company to predict no year-to-year growth in profit for the current fourth quarter.
The chain’s margins were squeezed by higher food costs and more sales coming from salads, which were less profitable than sandwiches or soups, the company said. The bakery-cafe operator and franchisor also said profits have been dampened by the outsourcing of some baking operations and stepped-up staffing at lunch.
The margin crunch, paired with nearly flat same-store sales throughout October, led Panera to project no year-to-year profit growth, and possibly a slight dip, for its current fourth quarter. The company said it expected to earn between 53 cents and 59 cents per share in the fourth quarter, which is even to below last year's results and current Wall Street expectations. In the year-ago fourth quarter, Panera earned 59 cents per share including a one-time charge, or 62 cents excluding that charge. Analysts were expecting a flat result this year, at a profit of 59 cents per share, according to Thomson Financial.
In the latest third quarter, Panera had said margin improvement during the last four weeks of the quarter would boost its earnings per share beyond Wall Street’s expectations, which it did. The company hit the high end of its projection for the quarter ended Sept. 25 with per-share earnings of 37 cents, compared with Thomson Financial’s consensus of 36 cents and last year’s figure of 34 cents.
Third quarter same-store sales rose year-over-year by 3.4 percent for corporate units and 2.1 percent for franchised stores, for a blended systemwide increase of 2.6 percent, the company reported.
Panera added 19 company stores and 16 franchise outlets during the quarter, bringing the systemwide tally to 1,168 locations.