Second-quarter net income increased 33% to $27 million, or $0.85 per share. Earnings included a $0.01-per-share benefit from the company's share repurchases, and a $0.05-per-share dent related to an ongoing unclaimed-property audit.
Panera's sales increased 14%, to $378.1 million. Same-store sales increased 9.9% overall. Company-owned cafe same-store sales increased 9.6%, driven by a 2.5% retail price increase and a product-mix impact of 5.2%. In its conference call, management attributed the performance to strength in salads, its meal-upgrade initiative, and its catering business. Importantly, operating margin ticked up nicely, climbing to 12.2% from 9.9% in the year-ago period.
Panera managers talked a little about the company's different segments in its conference call, such as high-performing "chill" business. Nope, "chill" is not an initiative encouraging customers to chill out in Panera (at least, not without buying something). It actually refers to Panera's line of frozen drinks and smoothies, all of which are made with Stonyfield Farm organic yogurt. This probably adds a granola-crunchy healthy halo to the drinks, and helps to distinguish them from rivals' offerings.
Management added that McDonald's
If investors displayed a rather "chilly" reception to Panera's results, it's because its guidance gave them little reason to get hot and bothered. Panera lowered third-quarter earnings estimates to a range of $0.71 to $0.73 per share; Wall Street analysts had expected $0.75. Still, Panera said it believes it will increase earnings by 26% to 27% in the full year.
McDonald's and Chipotle