MCD McDonalds Corp

Panera Bread Co. beat second-quarter expectations as the restaurant chain logged another quarter of sales growth, a sign its efforts to reignite revenue are working.

Shares gained 3.6% in after hours trading.

The St. Louis company came under pressure last year from activist shareholder Luxor Capital Group LP and has since worked to beef up operating efficiency and profits, closing some shops and improving systems in an effort to speed up lunchtime service.

The company's second quarter results "reinforce the fact that our strategy is working and our initiatives are performing," said Chief Executive Ron Shaich, adding that Panera is maintaining momentum "at a time when other restaurant companies are feeling the impact of a slowing consumer environment." Market research firm NPD Group Inc. reported last month that visits to fast-food restaurants stalled during the June quarter, and fast-food giant McDonald's Corp. said earlier Tuesday that domestic sales cooled far more than expected during the second quarter, with CEO Steve Easterbrook citing softening growth in the restaurant industry as a reason for the results.

In its latest quarter, Panera said systemwide sales at restaurants open at least a year rose 2.3%. While that increase was short of the 3.4% analysts predicted and slower than the 4.7% clip notched in the first three months of the year, it topped the 1.8% clip McDonald's logged in the U.S. Company-owned stores reported 4.2% sales growth at existing stores.

Overall for the quarter, Panera reported a profit of $34.5 million, or $1.46 a share, down from year-earlier earnings of $41.9 million, or $1.60 a share. Excluding a loss from refranchising, among other items, per-share earnings rose to $1.78 from $1.61.

Revenue edged up 3.3% to $698.9 million. Analysts surveyed by Thomson Reuters projected $1.74 a share on $696.4 million in revenue.

For the year, the company raised the low-end of its earnings forecast. Panera now sees $6.60 to $6.70 in adjusted earnings per share, compared with earlier guidance of $6.50 to $6.70. It backed its prediction of 4% to 5% growth in sales at existing company-owned locations. Panera in April had raised its forecast for the year.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

July 26, 2016 17:15 ET (21:15 GMT)

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