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Panera 1Q profit rises but misses Street estimate

ST. LOUIS (AP) -- Panera Bread Co. said Tuesday that its first-quarter net income rose 17 percent but missed expectations as fewer people stopped by its restaurants, and the company said it is consolidating the co-CEO roles into one position.

Shares fell more than 6 percent in after-hours trading on the miss.

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. However, Panera's results — as well as a recent slowdown at Chipotle — indicate that tough competition may be catching up to the sector.

Still, CEO Ron Shaich said he was pleased with the quarterly results despite bad weather during the quarter, and reiterated 2013 guidance.

He also said the company is "confident that the substantial investments we are making in food, marketing, catering and operational improvements will lay the foundation for our success over the next three to five years."

Shaich is becoming the sole CEO, effective Aug. 1, the company said Tuesday. His co-CEO Bill Moreton will become executive vice chairman. Moreton said he needs to spend more time on a "family matter" that is making it difficult to travel and fulfill co-CEO responsibilities.

Shaich was sole CEO between 1994 to 2010, and co-CEO during two stints, from 1988 to 1994 and again from March 2012 to the present.

Net income for the three months ended March 26 rose to $48.1 million, or $1.64 per share, from $41.2 million, or $1.40 per share, a year ago. Analysts expected net income of $1.65 per share, according to FactSet.

Revenue rose 13 percent to $561.8 million from $498.6 million but fell short of the average estimate of $566 million.

Revenue in restaurants open at least one year rose 3.3 percent. The measure is considered a key gauge of a restaurant company's financial health because it excludes stores that open and close during the year.

The average bill grew 5.7 percent, but there were fewer transactions, which were down 2.4 percent.

The company said results were hurt by poor weather in the U.S. in February and bad weather in the Midwest in March, including St. Louis, where the chain is based.

Looking ahead, Panera predicts net income of $1.74 to $1.78 per share in the second quarter and earnings per share growth of 17 percent to 19 percent for the full year, implying a range of $6.85 to $7. Analysts expect $1.77 per share for the first quarter and $7.06 per share for the year.

Shares fell $11.77, or 6.5 percent, to $168.67 in late trading, after ending the day up $1.29 at $180.44. The stock has traded between $135.40 and $185.67 over the past 52 weeks and has risen 13 percent since the beginning of the year.