Slow Rise For Panera Bread Turnaround

Panera Bread Co's (NASDAQ: PNRA) profit recovery may require several years, assuming that its store revamp plans succeed, an analyst said Friday.

The bakery-cafe operator changed hands recently at $163.30, down $0.69.

Longbow's Alton Stump said high spending will continue through 2016 on the company's Panera 2.0 plan to innovate in operations, food and marketing.

Stores converted under the plan so far have indeed produced higher revenue.

"But seemingly not enough to justify the spending," Stump said.

Stump maintained a Underperform rating and $122 target.

Company founder Ronald M. Shaich got called out of retirement in 2013 to lead a turnaround.

But the 33-year-old company last month predicted that 2015 earnings will be "flat to down" and said precise guidance is "difficult due to the number of moving pieces."

The company aims to have conversions complete this year on 400 of its 900 locations.

"Spending will likely hold at the same levels in 2016, if not worsen," according to Stump.

Costs for the revamp in 2014 "effectively turned what would have been mid-teens earnings growth into a slight decline," Stump said.