Potbelly Corporation Reports Preliminary Results for Fourth Fiscal Quarter and Full Year 2023
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Insights
Examining Potbelly Corporation's preliminary results, the reported same-store sales growth of 5.9% to 6.4% for the fourth quarter and 11.9% to 12.0% for the full year is a robust indicator of the company's operational performance. This metric is particularly significant as it strips out the impact of newly opened or closed stores, providing a more accurate reflection of organic growth and consumer demand. The growth is attributed primarily to an increase in customer traffic, which is an encouraging sign in the fast-casual industry where competition is fierce and customer loyalty is hard to win.
The Average Weekly Sales (AWS) figures surpassing the high end of the guidance range suggest effective operational management and potentially improved margins. However, it's essential to consider the reported benefit of an additional 53rd week in the fiscal calendar, which contributed approximately 580 basis points to the fourth quarter and 160 basis points to the full-year systemwide sales growth. This anomaly could inflate the perceived performance and should be normalized for a fair year-over-year comparison.
Furthermore, the Franchise Growth Acceleration Initiative yielding 192 new shop commitments signals a strong franchise development strategy, possibly enhancing the company's scalability and market penetration. However, the success of these new commitments will hinge on market conditions and the execution of the company's Five-Pillar Strategy. Stakeholders should monitor how these new shops contribute to systemwide sales and whether they can maintain the momentum of same-store sales growth.
From a financial perspective, Potbelly Corporation's preliminary results may be viewed positively by investors, as the company has outperformed its previously issued guidance. This overachievement can lead to favorable stock market reactions as it reflects management's ability to accurately forecast and deliver on expectations. However, investors should be cautious and await the audited financials, given that these figures are preliminary and unaudited. The acknowledgment of 'normal year-end accounting procedures and adjustments' suggests there could be revisions to these numbers.
The impact of the additional 53rd week should be considered when evaluating the company's year-over-year performance. It's a one-time event that can distort the true operational performance and may not be repeatable in the following year, potentially leading to tougher comparables. Investors should adjust their models to account for this when projecting future growth.
The increase in Average Unit Volumes (AUVs) to between $1.29M and $1.30M is a testament to the company's revenue-generating capabilities per unit. This figure is critical for understanding the underlying health of the business and the efficiency of its operations. It's also a key metric for potential franchisees evaluating the brand's profitability.
The reported same-store sales growth indicates a resilient consumer spending pattern in the face of broader economic challenges. Traffic growth as a major driver is an excellent sign for the economy, as it reflects consumer confidence and discretionary spending. However, the broader economic context, including inflationary pressures and potential shifts in consumer spending due to economic uncertainty, must be considered.
The expansion through franchise commitments could indicate a favorable economic environment for small business investments and entrepreneurship. The company's growth strategy may have positive spill-over effects on local economies by creating jobs and stimulating economic activity. Yet, it's important to remain vigilant about macroeconomic conditions that could affect consumer behavior and, consequently, Potbelly's future performance.
Given the competitive nature of the fast-casual industry, Potbelly's ability to grow its traffic share is noteworthy. It suggests that the company is successfully differentiating itself from competitors, which could be attributed to its Five-Pillar Strategy. This strategic positioning, if sustained, can lead to long-term economic advantages and increased market share.
Company to host a fireside chat and investor meetings at the 26th Annual ICR Conference in Orlando, FL Monday, January 8, 2023
192 new shop commitments to-date under the Franchise Growth Acceleration Initiative
CHICAGO, Jan. 08, 2024 (GLOBE NEWSWIRE) -- Potbelly Corporation (NASDAQ: PBPB), (“Potbelly” or the “Company”) the iconic neighborhood sandwich shop concept, today reported preliminary results for the fourth fiscal quarter and full year ended December 31, 2023.
| Fourth Quarter 2023 | Guidance (as of 11/1/23) | Preliminary Results |
| Same-Store Sales | + | + |
| Systemwide sales1 | - | + |
| Average Weekly Sales (AWS) |
| Full Year 2023 | Guidance (as of 11/1/23) | Preliminary Results |
| Same-Store Sales | + | + |
| Systemwide sales1 | - | + |
| Average Unit Volumes (AUVs) |
1Systemwide sales growth benefitted from a 53rd week in 2023. For the fourth quarter and full year the benefit was approximately 580bps and 160bps, respectively.
Bob Wright, President and Chief Executive Officer of Potbelly Corporation, commented, “Our preliminary fourth quarter results marked continued strong performance as our team executed on our Five-Pillar Strategy. On the top line, we grew same-store sales approximately
The expected financial results are preliminary and unaudited, have not been reviewed by the Company’s independent registered public accountants, and remain subject to the completion of normal year-end accounting procedures and adjustments and are subject to change. The Company expects to release final financial and operating results for its fiscal fourth quarter and fiscal year ended December 31, 2023 during March 2024.
ICR Conference Participation
Potbelly will participate in a fireside chat and host investor meetings at the 26th Annual ICR Conference in Orlando, FL on January 8-9, 2024. Potbelly’s fireside discussion will begin today at 3:00 PM Eastern time and will be webcast live from the Investor Relations section of the Company’s website at www.potbelly.com, under “Events and Presentations”.
About Potbelly
Potbelly Corporation is a neighborhood sandwich concept that has been feeding customers’ smiles with warm, toasty sandwiches, signature salads, hand-dipped shakes and other fresh menu items, customized just the way customers want them, for more than 40 years. Potbelly promises Fresh, Fast & Friendly service in an environment that reflects the local neighborhood. Since opening its first shop in Chicago in 1977, Potbelly has expanded to neighborhoods across the country - with approximately 430 shops in the United States including approximately 69 franchised shops in the United States. For more information, please visit our website at www.potbelly.com.
Definitions
The following definitions apply to these terms as used throughout this press release:
- Revenues – represents net company-operated sandwich shop sales and our franchise royalties and fees. Net company-operated shop sales consist of food and beverage sales, net of promotional allowances and employee meals. Franchise royalties and fees consist of royalty income, franchise fee, and other fees collected from franchisees including advertising and rent.
- Company-operated comparable store sales or same-store traffic – an operating measure that represents the change in year-over-year sales or transactions for the comparable company-operated store base open for 15 months or longer.
- Average Weekly Sales (AWS) – an operating measure that represents the average weekly sales of all company-operated shops which reported sales during the associated time period.
- Average Unit Volume (AUV) – an operating measure that represents the average annual sales of all company-operated shops which reported sales during the associated time period.
- System-wide sales – an operating measure that represents the sum of sales generated by company-operated shops and sales generated by franchised shops, net of all promotional allowances, discounts, and employee meals. Net sales from franchised shops are not included in total revenues. Rather, revenues are limited to the royalties, fees and other income collected from franchisees.
Forward-Looking Statements
This press release may contain statements that might be considered as forward-looking statements or predictions of future operations including with respect to the Company’s ability to sign additional agreements for new shops and sustain positive momentum into 2024. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management’s belief or interpretation of information currently available. These statements and assumptions involve certain risks and uncertainties including that it is unable to successfully execute its growth plans and that the Company is not able to achieve its planned expansion. Actual events may also differ from these expectations as a result of the risks identified from time to time in our filings with the Securities and Exchange Commission. We assume no duty to update these statements as of any future date.
Investor Contact:
Jeff Priester
ICR
investor@potbelly.com
Media Contact:
ICR
PotbellyPR@icrinc.com
FAQ
What were Potbelly Corporation's preliminary results for the fourth fiscal quarter and full year ended December 31, 2023?
How many new shop commitments did Potbelly announce under the Franchise Growth Acceleration Initiative?
When will Potbelly release final financial and operating results for its fiscal fourth quarter and fiscal year ended December 31, 2023?
Where will Potbelly participate in a fireside chat and investor meetings?
Where can I watch Potbelly's fireside discussion from the ICR Conference?
