AP News

Panera's investments to trim near-term profits

ST. LOUIS (AP) — Panera Bread Co. said Tuesday it is investing more in its restaurants, a move that may cut into its near-term profitability.

The St. Louis-based restaurant chain's shares slipped in extended trading.

Panera said that it expects to earn $6.80 to $7.05 per share for its fiscal year on an adjusted basis. Analysts polled by FactSet were anticipating $7.30 per share. It also forecast first-quarter earnings of $1.49 to $1.55 per share for its first quarter; analysts were anticipating $1.70 per share.

Company Chairman and CEO Ron Shaich said that while Panera believes investments will result in "modest" earnings growth in the near term, the spending should increase some important sales measures and ultimately its long-term earnings.

Panera is holding an investor day in March when it will discuss its strategic plan in more detail.

The company issued its earnings guidance as it reported a 5 percent increase in its fourth-quarter net income.

Panera earned $54.2 million, or $1.96 per share, for the period that ended Dec. 31 versus $51.6 million, or $1.75 per share, in the prior year. Revenue increased nearly 16 percent to $661.7 million from $571.5 million. Analysts were anticipating earnings of $1.94 per share on revenue of $660.3 million.

Panera's stock fell $2.18 to $171 in after-hours trading following the announcement. Its stock fell $5.04 to close regular trading at $173.18, up nearly 9 percent from this time last year.

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