Buffalo Wild, Panera Beat On Earnings But Sales Shy

May 18, 2012

Buffalo Wild Wings (BWLD) and Panera Bread (PNRA) reported better-than-expected earnings late Tuesday as consumers dined out more during an unseasonably warm January and February. But revenue for the casual eateries came in just shy of analyst forecasts.

Buffalo Wild, which unexpectedly reported before the close, said earnings rose 21% to 98 cents a share. Analysts had seen 95 cents. The wings joint’s revenue climbed 38% to $251.1 million, just a hair under estimates for $251.2 million. Sales at company-owned stores open more than a year climbed 9.2%.

Traffic that tapered off slightly in March might have caused the revenue miss, analysts said.

Elevated food costs remain a concern. Buffalo paid $1.92 per pound for its signature wings, 57% higher than a year ago. Prices remain elevated in the current Q2, the company said in a conference call, rather than tapering off as they traditionally do. It guided the rest of its commodity costs up about 4% for the year.

So Buffalo is raising some prices in Q2, such as its Tuesday night special, to 50 cents per wing.

It reaffirmed its full-year guidance of 20% profit growth.

“We have a disciplined approach to managing the costs we can control,” CEO Sally Smith said on a post-earnings conference call.

Shares fell 6% to 78.17 — its lowest close since Buffalo’s prior blowout report.

After the market close, Panera said earnings per share climbed 28% to $1.40 per share, 5 cents above forecasts. Sales rose 18% to $499 million, just missing forecasts for $500.8 million. Same-store sales at its company-owned restaurants grew 7.5%.

Nick Setyan, a restaurant analyst with Wedbush Securities, said it appeared the company managed its food, beverage and other rising costs.

“They’ve been able to pass that on more than I would have expected,” he said.

The sandwich maker sees Q2 EPS of $1.40-$1.43. Wall Street had expected $1.40.

Shares rose about 1% in late trading after falling 93 cents to 148.25 during the regular session.

Panera now sees “full-year fiscal 2012 earnings slightly above the high end of our long-term range of 15% to 20%,” co-CEO Bill Moreton said in a statement.

Panera hosts a Wednesday morning conference call.

The overall industry began 2012 strong, says Darren Tristano, executive vice president of the restaurant consulting firm Technomic. Unusually sunny skies in January and February in much of the country lured consumers out of their homes. An extra day this leap year helped too. Consumers appear to have tightened their wallets somewhat in March, analysts say.

“Casual diners had a pretty bad March,” Setyan said.

Tristano’s firm maintains its 2012 sales forecast of just 3% to 3.5% for the sector.

Buffalo Wild pushed its gift cards at Target (TGT), Wal-Mart Stores (WMT) and other retailers in Q4, and doubled sales of them in the holiday period. The eatery said card redemptions accounted for 2 percentage points of its same-store gains.

Rising commodity costs are a common theme, says Maryanne Rose, CEO of SpenDifference, which helps restaurants with supply chain issues.

“Everyone’s taking price increases,” she said. “I’m not getting the feeling that people are getting a lot of push-back from the consumer.”

With prices rising at the pump and the grocery line, customers expect it from restaurants, she said: “There’s just a new normal .”