Saturday, March 8, 2014

Potbelly Shares Sink as Sales Stink

Shares of Potbelly (PBPB) have dropped 4.7% to $21.33 in after-hours trading after the sandwich seller beat earnings forecasts but missed on revenue.

Potbelly said it earned 6 cents a shares, above analyst forecasts for 4 cents, on revenue of $74.8 million, below forecasts for $76 million. Potbelly also predicted that net income would grow at a 25% to 35% clip, while same-store sales at company-operated stores would grow in the low single digits.

CEO Aylwin Lewis had this to say in Potbelly’s earnings release:

We are pleased with our fourth quarter results. We delivered adjusted net income of $1.9 million or $0.06 per diluted share for the quarter, which represents roughly 35% growth, after eliminating the 53rd week impact from 2012 and neutralizing the tax rate difference. There is no question the external environment was disruptive during the quarter; however, we remained resilient and delivered top and bottom line growth in our comparable shops, opened thirteen new shops and managed overhead diligently to deliver solid returns for the quarter. Our long-term growth plan remains very much on track to achieve at least 10% unit growth and 20% plus EPS growth on an annual basis. We also remain excited about our growth trajectory and continue to deliver on our passion of being “The Best Place for Lunch.”

He may be pleased, but investors surely aren’t.

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