Investing.com -- Shares in Panera Bread Company (O:PNRA) fell considerably on Tuesday after the sit-down restaurant chain saw its profits sink 17% even in the face of healthy growth during the period.
For the company's third quarter, the company grew revenues by 7% to $665 million, as its company-owned, comparable café and bakery sales jumped by nearly 4%. Still, the company saw its earnings fall to $32.4 million or 1.27 per share from $39.2 million over the same period in 2014, amid higher costs which led to sharp declines in margin. Confronted with higher demand, Panera expects to hire more staff and improve technology in order to serve customers more quickly.
Analysts expected the company to finish with revenues of $667 million on earnings of 1.31 per share.
In spite of the revenue and earnings beat, Panera Bread CEO Ron Shaich appeared fairly pleased with the quarterly results.
"Our strategic plan to generate increased shareholder value by making Panera a better competitive alternative with runways for expanded growth is working. Leading sales indicators are showing just that. Company comp-store sales growth continues to accelerate, rising 3.8% in Q3 and 3.4% for the first 27 days of Q4," Shaich said in a statement.
"We are particularly pleased with these results in light of the slowing sales reported across the industry in October. Q3 represented our best performance in nine quarters. Panera’s Q3 comps outperformed the industry by 229 bps when measured against the Black Box all-industry composite, the largest differential we’ve seen in 2 years."
Moving forward, Panera is hoping to sell 50 to 150 company-owned locations in low performing markets throughout the U.S. to handle rising expenses. For the fourth quarter, Panera anticipates attaining the midpoint of its full-year growth range between 2.0 and 3.5%.
"Our initiatives to expand into several $1 billion-plus adjacent businesses, including catering, delivery and consumer-packaged goods, are also gaining traction. Despite the high level of pressure on our near-term earnings related to the startup and transition costs associated with our strategic initiatives, the progress we see gives us increased confidence in our strategic plan and its ability to drive expanded earnings growth well into the future," Shaich added.
Shares in Panera Bread fell 3.08 or 1.63% to close at 186.07 on Tuesday.