NEW YORK (AP) -- Shares of Panera Bread Co. fell 6 percent in premarket trading Wednesday after the restaurant chain reported net income rose nearly 16 percent, but missed expectations and cut its outlook for the year.
Fast-casual chains like Panera, which operates 1,673 restaurants, and Chipotle Mexican Grill have been gaining in popularity in the U.S. and are seen as a step up from traditional fast-food chains. But competition has been increasing in the sector, hurting Panera's results.
Company CEO Ron Shaich said revenue in stores open at least one year, a key retail metric, rose 3.8 percent but fell below expectations for the quarter. He said the company has to more quickly serve customers during its peak hours.
"While results in the next few quarters may be choppy as we invest in both sales-building initiatives and operational capabilities, we believe that our efforts will ultimately enable us to deliver an enhanced customer experience, grow sales and expand earnings," he said.
Net income for the three months ended June 25 rose to $51 million, or $1.74 per share, from $44.1 million, or $1.50 per share, last year. Analysts expected net income of $1.77 per share, according to FactSet.
Revenue rose 11 percent to $589 million from $530.6 million a year ago. Analysts expected $595.6 million.
For the third quarter, Panera said revenue in cafes open at least a year are up 2.1 percent so far. The company expects the measure to rise 2 percent to 4 percent during the quarter and expects net income of $1.32 to $1.36 per share. Analysts expect $1.46 per share.
In the fourth quarter, the company expects net income of $2.05 to $2.11 per share. Analysts expect $2.18 per share.
For the year, the company expects net income of $6.75 to $6.85 per share, from a prior range of $6.85 to $7 per share, while analysts expect $7.05 per share.
William Blair analyst Sharon Zackfia said she remains concerned about traffic trends but added that the stock decline will probably be limited to a 5 percent to 10 percent decline, which the company can offset by buybacks. She kept her "Outperform" rating on the stock but said she does not expect positive sales news to come until September, when comparisons with last year get easier.
Shares fell $10.26, or 5.6 percent, to $171.75 after closing at $182.01 on Tuesday. The stock has traded between $138.54 to $194.77 during the past 52 weeks.