Panera Bread’s Net Margins Declined Due Increased Expenses



Net income and net margins overview

Panera Bread (PNRA) reported a net income of $48.5 million. It declined 10.6%—compared to $54 million during the same quarter last year.

Net profit margins also declined from 8% to 7.2% over the same period. The decline was primarily due to an increase in operating expense by 1.4% to $595 million year-over-year, or YoY. This increased with labor and food costs, as we discussed earlier in this series.

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Costs increased

For the quarter, the general and administrative costs were $35.9 million. They decreased 1.3% from $36.4 million—compared to the same quarter last year. Depreciation and amortization costs also increased by 9% from $30.6 million to $33.4 million. This squeezed the profit margins more.

To learn how Chipotle Mexican Grill (CMG) and McDonald’s (MCD) performed, read Chipotle Mexican Grill delivers an impressive 52% growth in EPS and McDonald’s EPS Declined 19% In 4Q14.

Chipotle Mexican Grill and McDonald’s are included in the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY holds 37% of retail stocks—including Starbucks (SBUX).

Interest and tax expense

Interest expenses declined slightly by $60 million to $438 million. The effective tax rate for the quarter was 34.3%. The tax rate declined—compared to 36.9% during the same quarter last year.

Cash flow

At the end of the third quarter, Panera Bread’s cash was $196 million. The fourth quarter generated $140 million in cash flow. The company had capital expenditures of $69 million. It also repurchased shares worth $25 million during the quarter.


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