St. Louis-based Panera Bread Company, the owner and franchiser of bakery-cafes under the Panera Bread and Saint Louis Bread Co. names, has reported net income of US$3.87m for its Q2 ended 13 July 2002, compared to US$2.35m year on year.
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Earnings per share (EPS) increased 63% to US$0.13 for the Q2, from US$0.08 year on year. EPS amounts have been adjusted to reflect the two-for-one stock split payable in the form of a stock dividend on 24 June 2002.
System-wide sales and total revenues increased 45% and 43%, respectively, for the Q2 2002, compared to the Q2 2001, as follows:
12 Weeks ended 12 Weeks Ended Percentage
13 July 2002 14 July 2001 Increase
System-wide sales $167,214,000 $115,102,000 45%
Total revenues $62,274,000 $43,680,000 43%
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By GlobalDataSystem-wide comparable bakery-cafe sales (excluding the one specialty bakery-cafe and closed locations) increased 6.7% for the Q2 2002 (4.6% for company-owned and 7.8% for franchised bakery-cafes). This marks the 26th consecutive quarter that Panera Bread (on a stand-alone basis) has reported positive comparable company bakery-cafe sales. Comparable bakery- cafes include those bakery-cafes that have been open for at least 18 four week periods in the reporting quarter.
As of 13 July 2002, there were 414 Panera Bread bakery-cafes (including the one specialty bakery-cafe). During the Q2 2002, 25 new Panera Bread bakery-cafes were opened and one bakery-cafe was closed, as follows:
Company-owned Franchised Total System
Bakery-cafes as of 20 April 2002 117 273 390
Bakery-cafes opened 6 19 25
Bakery-cafes closed 0 -1 -1
Bakery-cafes as of 13 July 2002 123 291 414
During the Q2, Panera signed a new area development agreement in Los Angeles county for a commitment of 17 new bakery-cafes and increased an existing area development agreement in Iowa by three bakery- cafes. This brought the total number of active additional franchise commitments in place as of 13 July 2002 to 509.
System-wide average weekly sales (excluding the one specialty bakery-cafe and closed locations) for the Q2 2002, were US$34,650 per week. This equates to an annualised sales volume of US$1.8m, up 6.3% year on year.
Bakery-cafe sales and operating weeks
12 weeks ended 12 weeks ended Percentage
13 July 2002 14 July 2001 Increase
Average weekly bakery-cafe
sales(A) $34,650 $32,590 6.3%
Operating weeks(A) 4,824.7 3,525.6 36.8%
(A) Excludes the one specialty bakery-cafe and closed locations.
Ron Shaich, chairman and CEO, commented: “We are very pleased with our record Q2 results. Our 63% growth in year over year EPS was fuelled by our very strong average unit volumes, which have risen to US$1.8m on an annualised basis, and the development activity those volumes engender. These record results further demonstrate the consumer’s growing desire for a higher quality food experience rooted in bread expertise. That trend, in turn, speaks to the potential of Panera Bread to significantly expand its number of bakery-cafes and its earnings in the future.”
Business outlook
The company continues to target FY 2002 EPS of US$0.70, up 52% on EPS of US$0.46 in FY 2001. The Q3 and Q4 EPS targets remain US$0.16 and US$0.24, respectively. The company is targeting comparable bakery-cafe sales increases in the 3% to 4% range. It also reiterates its commitment to the 2003 EPS target of US$0.98, which would be a 40% increase over the 2002 EPS target.
Panera also continues to target the opening of 115 new bakery-cafes in 2002 (25 company-owned and 90 franchised). The remaining opening targets break down into 24 bakery-cafes in the Q3 (3 company-owned and 21 franchised) and 42 in the Q4 (9 company-owned and 33 franchised).
Consolidated statements of operations
(unaudited) (in thousands, except per share amounts)
For the twelve For the twenty-eight
weeks ended weeks ended
July 13, July 14, July 13, July 14,
2002 2001 2002 2001
Revenues:
Bakery-cafe sales $48,192 $34,445 $107,669 $76,559
Franchise royalties and fees 6,096 4,267 13,400 9,336
Commissary sales to franchisees 7,986 4,968 18,210 11,061
Total revenue 62,274 43,680 139,279 96,956
Costs and expenses:
Bakery-cafe expenses:
Cost of food and paper
products 15,296 10,858 33,186 24,045
Labor 14,619 10,250 32,563 22,670
Occupancy 3,414 2,505 7,750 5,562
Other operating expenses 6,733 4,662 14,584 10,473
Total bakery-cafe expenses 40,062 28,275 88,083 62,750
Commissary cost of sales
to franchisees 7,329 4,670 16,774 10,242
Depreciation and amortization 3,139 2,396 6,927 5,258
General and administrative
expenses 5,609 4,419 12,893 9,760
Total costs and expenses 56,139 39,760 124,677 88,010
Operating profit 6,135 3,920 14,602 8,946
Interest expense 6 31 14 61
Other (income) expense, net (10) 41 191 21
Minority interest 40 – 70 –
Income before income taxes 6,099 3,848 14,327 8,864
Income taxes 2,226 1,494 5,229 3,450
Net income $3,873 $2,354 $9,098 $5,414
Net income per common share
– basic $.13 $.08 $.32 $.20
Net income per common share
– diluted $.13 $.08 $.30 $.19
Weighted average shares of common
and common equivalent shares
outstanding
Basic 28,845 27,814 28,733 27,422
Diluted 30,025 29,300 29,874 28,793
