Wheat costs, charges eat into Panera’s 1st-Q profit

RICHMOND HEIGHTS Mo. Escalating wheat costs, along with higher labor and interest expenses, hurt Panera Bread Co.'s profits for its first quarter ended March 25, the company reported.

Earnings fell 17 percent to $12.4 million, or 41 cents per share, from $15 million or 47 cents per share in the prior-year quarter. Quarterly revenue rose 27 percent to $305 million, from $239.7 million a year ago.

Panera's earnings beat an average estimate by analysts polled by Thomson Financial of earnings of 39 cents per share on revenue of $302.8 million.

The company blamed a jump in wheat costs, to about $13 per bushel from $5.80 per bushel in the first quarter of 2007, for most of the profit plunge.

Also affecting first-quarter profits was a charge of about $2.7 million, or 6 cents per share, in general and administrative expenses for previously capitalized development and lease expenses for some sites the company decided not to open.

Same-store sales rose 3.3 percent at company-owned bakery-cafes and 1.7 percent at franchised stores, the company said.

Helping same-store sales was a 3-percent price increase in company-owned units. Panera also said that margins were helped by the removal of the Crispani flat-bread pizzas that had failed to meet sales goals.

Panera opened 27 restaurants systemwide in the quarter and closed five. It plans to open 40 company units and 60 franchised spots this fiscal year.

Panera operates or franchises 1,252 bakery-cafes under the names of Panera Bread and St. Louis Bread Co.