Panera's Soggy Bread

Panera Bread (Nasdaq: PNRA  ) may offer its customers tasty goodies, but it seems that lately, investors have been more in the mood to spit them out. Its November same-store sales data certainly gave investors something unpleasant to chew on.

Same-store sales at Panera rose just 1.4% in November, compared to a hefty 7.7% increase this time last year. And surely nobody's thrilled that Panera said last week's storms in the Midwest will take a toll on December's sales, since 40% of its stores are located where the storms hit. Panera's December comps are expected to be negatively affected by 1% and in the range of flat to up 2.5%.

In more downbeat news, Panera said that fourth-quarter earnings will come in at $0.62 to $0.65 per share. Analysts had been forecasting $0.67 per share for the quarter.

Panera's been a pricy stock (check out this article from the beginning of 2006, when things looked rosier). Lately, though, Panera has shared some tidings that have helped to ratchet down optimism. Last quarter, Panera gave a rather disappointing forecast, and I noted that its expenses ballooned. While those expenditures may help the company over the long term, given some of the uncertainty, maybe it's not surprising that investors have started lacking faith.

After all, Panera has been on an aggressive growth trajectory, and some comparisons to the mighty Starbucks (Nasdaq: SBUX  ) certainly may have been premature. And I have to say, the decidedly weird situation with Jack in the Box's (NYSE: JBX  ) Qdoba Mexican grill recently -- in which the courts had to get involved to rule that a taco or a burrito is not a sandwich -- doesn't exactly make me feel particularly heartened by how Panera feels about its own competitive edge.

I have nothing against Panera; the times I've gone there for lunch I've found it a pleasant enough experience. However, whether it's a tasty investment is another matter altogether. With a stock that starts to look super pricy, investors do well to consider whether the company is really a leader, if not the leader -- and I'm not sure I'd say Panera's got a competitive edge over Starbucks or even Chipotle Mexican Grill (NYSE: CMG  ) , Cosi (Nasdaq: COSI  ) , or any number of companies that provide lunch, coffee, baked goods, or any combination thereof.

At any rate, last quarter I supposed that there was no reason for potential investors to hurry into Panera right now, and I stand by that thought. There's a lot that remains to be seen, and maybe Panera's share price will continue to retreat to more palatable levels.

For related Foolishness, see the following articles:

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Alyce Lomax owns shares of Starbucks, but none of the other companies mentioned. The Fool has a tasty disclosure policy.


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