Panera Bread Company Reports Fiscal 2010 Diluted EPS of $3.62, Up 30% Over Fiscal 2009, on 7.9% Growth in System-Wide Comparable Net Bakery-Cafe Sales

Panera Bread Company (NASDAQ: PNRA)

HIGHLIGHTS

-- Q4 2010 Diluted EPS grew 27% versus Q4 2009 to $1.21

-- Record level Company-owned new bakery-cafe AWS of $40,808 in 2010

-- Q4 2010 Company-owned comparable net bakery-cafe sales up 5.2%

-- Q1 2011 EPS target set at $1.06 to $1.08 (up 29% to 32%)

-- Full Year 2011 EPS target increased to $4.40 to $4.45 (up 22% to 23%)

Panera Bread Company (NASDAQ: PNRA) today reported net income of $112 million, or $3.62 per diluted share, for the fifty-two weeks ended December 28, 2010. These results compare to net income of $86 million, or $2.78 per diluted share, for the fifty-two weeks ended December 29, 2009, and represent a 30% year-over-year increase in diluted earnings per share.

For the fourth quarter ended December 28, 2010, net income was $37 million, or $1.21 per diluted share. The fourth quarter of fiscal 2010 results compare to net income of $30 million, or $0.95 per diluted share, for the fourth quarter ended December 29, 2009, and represent a 27% year-over-year increase in diluted earnings per share.

The Company's full year and fourth quarter fiscal 2010 consolidated statements of operations and margin analyses 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):

 

                            For the 52 Weeks Ended

                      ---    Percentage

                      December 28, 2010 December 29, 2009      Change

                      - - 

Total revenue         $       1,542,489 $       1,353,494               14%

Net income            $         111,866 $          86,050               30%

Diluted earnings per

 share                $            3.62 $            2.78               30%

Shares used in

 diluted EPS                     30,922            30,979





                            For the 13 Weeks Ended

                      ---    Percentage

                      December 28, 2010 December 29, 2009      Change

                      - - 

Total revenue         $         428,161 $         366,972               17%

Net income            $          36,520 $          29,696               23%

Diluted earnings per

 share                $            1.21 $            0.95               27%

Shares used in

 diluted EPS                     30,092            31,246

Fourth Quarter Fiscal 2010 Results and Business Review

Comparable Net Bakery-Cafe Sales Growth

In the fourth quarter of fiscal 2010, system-wide comparable net bakery-cafe sales increased 5.8%, Company-owned comparable net bakery-cafe sales increased 5.2% and franchise-operated comparable net bakery-cafe sales increased 6.1% versus the comparable period in fiscal 2009. Two year system-wide comparable net bakery-cafe sales increased 11.7%, two year Company-owned comparable net bakery-cafe sales increased 12.5% and two year franchise-operated comparable net bakery-cafe sales increased 11.0%.

The Company-owned comparable net bakery-cafe sales increase of 5.2% in the fourth quarter of fiscal 2010 included the following year-over-year components: transaction growth of 2.9% and average check growth of 2.3%. Average check growth was comprised of retail price increases of approximately 2.0 % and mix impact of approximately 0.3%. A schedule of comparable net bakery-cafe sales information is attached as Schedule III.

Operating Margin

In the fourth quarter of fiscal 2010, the Company generated operating margin improvement of approximately 130 basis points compared to the fourth quarter of fiscal 2009. This operating margin improvement was primarily the benefit of sales leverage from comparable net bakery-cafe sales increases and operating efficiencies on labor-related expenses.

Capital Deployment

For the full fiscal year 2010, the Company opened 42 new bakery-cafes and its franchisees opened 34 bakery-cafes. During the fourth quarter of fiscal 2010, the Company opened 21 new bakery-cafes and its franchisees opened 12 new bakery-cafes. As a result, there were 1,453 bakery-cafes open system-wide as of December 28, 2010. Additionally, during the fourth quarter of fiscal 2010, the Company completed the purchase of substantially all the assets and certain liabilities of 37 bakery-cafes from a New Jersey franchisee and acquired the remaining noncontrolling interest in three bakery-cafes in the Ontario, Canada market from a former franchisee. The breakdown of Company-owned and franchise-operated bakery-cafes are as follows:

 

                        Company-owned  Franchise-operated   Total System

                          



Bakery-cafes as of

 September 28, 2010                605               816             1,421

Bakery-cafes opened                 21                12                33

Bakery-cafes closed                 (1)                -                (1)

Bakery-cafes acquired               37               (37)                -

                          

Bakery-cafes as of

 December 28, 2010                 662               791             1,453

                      ================  ================  ================

Average weekly sales ("AWS") for Company-owned new units for full year fiscal 2010 was $40,808 compared to $37,618 in the same period of fiscal 2009. This new unit AWS was the highest in Company history. AWS for Company-owned new units in the fourth quarter of fiscal 2010 was $40,686 compared to $38,057 in fiscal 2009. AWS for franchise-operated new units for full year fiscal 2010 was $38,841 compared to $36,326 in fiscal 2009. AWS for franchise-operated new units in the fourth quarter of fiscal 2010 was $39,851 compared to $37,486 in the same period of fiscal 2009. A schedule of the fourth quarter and full year fiscal 2010 AWS is attached as Schedule II.

During the full year fiscal 2010, the Company repurchased $150 million of shares at an average share price of $78.72. No shares were repurchased during the fourth quarter of fiscal 2010. Share repurchased during fiscal 2010 had a favorable impact of approximately $0.10 on the Company's full year fiscal 2010 earnings per diluted share. The Company currently has approximately $448 million available under the existing $600 million repurchase authorization.

Full Year 2011 Targets

Raising Full Year Fiscal 2011 Targets

Diluted EPS Target

The Company is raising its target for fiscal 2011 earnings per diluted share to $4.40 to $4.45, which would represent an increase from fiscal 2010 of 22% to 23% in year-over-year earnings per diluted share. This is an increase from the Company's prior full year fiscal 2011 earnings per diluted share target of $4.30 to $4.35. This increase in the full year fiscal 2011 target is based on the outperformance in fiscal 2010 and the momentum in the business entering fiscal 2011.

The full year fiscal 2011 diluted earnings per share target is based on the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth

The Company is maintaining its full year fiscal 2011 target for Company-owned comparable net bakery-cafe sales growth of 4.0% to 6.0%. The two year Company-owned net bakery-cafe sales growth target is 11.5% to 13.5%. The 2011 Company-owned target assumes transaction growth between 2.0% and 4.0%, supported by the expected impact of the Company's MyPanera(tm) loyalty program, increased media spending, and average check growth of approximately 2.0%. The Company is projecting a year-over-year price increase of approximately 2.0% and zero net impact from sales mix.

Operating Margin Improvement

In fiscal 2011, the Company is targeting operating margin to be up 0 to 50 basis points versus the prior year reflecting modest operating leverage on sales growth.

Capital Deployment

The Company continues to expect approximately 95 to 105 new unit system-wide openings in fiscal 2011. Average weekly sales for new Company-owned units is targeted to be $37,000 to $39,000 in fiscal 2011.

The earnings per diluted share target includes accretion of approximately $0.25 per diluted share from repurchases made during fiscal 2010, but does not include any incremental share repurchases in fiscal 2011.

First Quarter Fiscal 2011 Outlook

Establishing First Quarter Fiscal 2011 Targets

Diluted EPS Target

The Company's first quarter of fiscal 2011 diluted earnings per share target assumes earnings per diluted share of $1.06 to $1.08, which would represent an increase of 29% to 32% in the first quarter of fiscal 2011 versus the comparable period in fiscal 2010. This earnings per diluted share target does not assume any additional share repurchases.

This first quarter of fiscal 2011 diluted earnings per share target is based on the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth

The Company's first quarter of fiscal 2011 target assumes Company-owned comparable net bakery-cafe sales growth of 3.0% to 4.0% versus the comparable period in fiscal 2010. The two year Company-owned comparable net bakery-cafe sales target is 13.0% to 14.0%, which represents an acceleration from the two year comparable sales trends realized in fiscal 2010. The assumptions underlying this comparable net bakery-cafe sales growth target for the first quarter are transaction growth of 1.5% to 2.5% and average check growth of approximately 1.5%, with average check growth comprised of retail price increases of approximately 1.5% and minimal impact from mix.

The Company announced today system-wide comparable net bakery-cafe sales in the first 43 days of the first quarter of fiscal 2011 were up approximately 2.8%, including the impact of the recent winter storms. Company-owned comparable net bakery-cafe sales were up approximately 2.9%, and franchise-operated comparable net bakery-cafe sales were up approximately 2.6%, during the same period.

Operating Margin Improvement

In the first quarter of fiscal 2011, the Company is targeting operating margin to be up 25 to 75 basis points versus the prior year reflecting modest operating leverage on sales growth.

Capital Deployment

The Company is targeting new unit development of 15 to 18 system-wide new unit openings for the first quarter of fiscal 2011 with average weekly sales for Company-owned new units consistent with full year target of $37,000 to $39,000.

Concluding Comment

Bill Moreton, CEO, commented, "We are pleased to deliver 27% earnings growth in the fourth quarter, marking the tenth out of the last eleven quarters of 20% plus growth. We believe this trend speaks to our strategy of continually investing in the quality of our customers' experience to drive concept differentiation and competitive advantage. We expect 2011 to be another successful year as we target 22% to 23% EPS growth, which is consistent with our targeted 15% to 20% EPS growth rate over the next several years."

 

Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet