Panera Bread Announces Progress On A Number Of Key Value Enhancing Initiatives

Panera Bread Announces Progress On A Number Of Key Value Enhancing InitiativesPanera Bread Announces Progress On A Number Of Key Value Enhancing InitiativesPanera Bread Company (NASDAQ: PNRA) has announced progress on a number of key value enhancing initiatives:

  • Panera’s Board of Directors approved an increase to the Company’s current share repurchase program to $750 million. The Company expects to purchase $500 million of shares within the next twelve months, through a combination of cash on hand, cash flow from operations, and $500 million of new debt, taking advantage of the attractive current interest rate environment. Since 2012, the Company has repurchased approximately $511 million of Panera common stock, or 11% of the shares outstanding, including $154 million of shares that were repurchased during 2014.
  • Panera is making significant progress on its previously announced plan to refranchise 50 to 150 cafes in 2015. As of today, the Company has entered into letters of intent to sell and refranchise 73 cafes and is on track to reach its refranchising goal for 2015. The Company expects the sale of these cafes to be accretive to ongoing earnings and will have a related one-time charge. This ongoing accretion was included in the Company’s full-year earnings target. The Company also expects to use the proceeds from the refranchising efforts to repurchase shares. These repurchases would be incremental to the $500 million of planned repurchases as noted above.

“Recently, Panera has been implementing a series of structural enhancements to improve our competitive position and expand growth opportunities,” said Ron Shaich, Panera’s Chairman and CEO. “Panera is focused on building competitive advantage by reducing customer friction in its cafes through its Panera 2.0 initiative, which includes digital access and improved operational processes, and driving customer desire through innovation in food, marketing and store design. Panera has also been focused on driving continued traditional cafe expansion, while working to enhance capabilities necessary to generate expanded growth in several large adjacent businesses, including large-order delivery (catering), small-order delivery and consumer packaged goods. The increase to our share repurchase program reflects our confidence in the business and our ability to continue driving shareholder value in the medium- and long-term.”

Shaich continued, “As discussed on our fourth-quarter earnings call, we remain committed to closely monitoring our non-strategic costs to enable the Company to reallocate resources from support functions to growth initiatives. We anticipate this will result in a 5% reduction in core G&A expenses in 2015. Furthermore, in February, we engaged a leading global management consulting and technology services firm to review our technology plans, processes, procedures and costs.”

The Company believes technology is a key enabler of its overall strategy. Therefore, in the coming months, the Board intends to add an independent outside director with extensive senior-level technology experience.

The Company further noted that the Board and management team regularly enlist shareholder input with the shared goal of delivering value, and to that end, the Company recently engaged in a constructive dialogue with one of its shareholders, Luxor Capital Group, LP.

“We support the actions that Panera’s Board of Directors and management announced today,” said Christian Leone, CEO and Founder of Luxor Capital. “We have long admired the Panera brand and appreciate the constructive dialogue we have had with the Company. We are confident in the Panera team’s ability to grow the business and continue to build shareholder value.”

As of December 30, 2014, there were 1,880 bakery-cafes in 45 states, the District of Columbia, and in Ontario, Canada, operating under the Panera Bread, Saint Louis Bread Co. or Paradise Bakery & Café names.  Additional information is available on our website,