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Panera cuts forecast as competition heats up

Panera cuts forecast as competition heats up

October 22nd, 2013 in News

NEW YORK (AP) - Panera lowered its forecast for the year on Tuesday as the company saw customer visits decline in the latest quarter and conceded that its offerings of soups, salads and sandwiches may not be as unique as they once were.

The restaurant chain, based in St. Louis, said sales rose 1.7 percent at company-owned stores open at least a year during its third quarter. That increase was the result of price hikes, however, which the company said offset a decline in transactions.

CEO Ron Shaich noted in a statement that the recent sales performance had prompted to "great deal of self-examination" and that a review had found operational inefficiencies, as well as a "less differentiated experience" that limits its ability to draw more customers.

He said Panera was taking "a number of deliberate steps" to improve its operations and competitive standing.

For the quarter, the company earned $42.8 million, or $1.48 per share. That's down from $36.5 million, or $1.24 per share, a year ago.

Not including one-time items, the company earned $1.35 per share, which was in line with Wall Street expectations.

Revenue rose to $572.5 million, but fell short of the $583.9 million analysts expected, according to Factset.

For the year, Panera Bread Co. now expects sales at company-owned locations to increase between 2 percent and 2.75 percent. It had previously forecast growth of 3 percent to 5 percent.

It's also now targeting its earnings per share for 2013 to be at the low end of its long-term growth target of 15 percent to 20 percent.

So far in the current quarter, Panera said sales at established stores are up 1.6 percent. It now expects the figure to be flat to up 2 percent for the period, down from its previous forecast for growth of 3 percent to 5 percent.

Panera now expects its earnings to come in between $1.91 to $1.97 per share in the period, down from a previous forecast of $2.05 to $2.11 per share.

Shares of Panera fell 3 percent at $157.20.