Shares of Potbelly (PBPB) fell on Monday after the sandwich chain said that it hired an adviser to review strategic options as it reported another quarter of results that fell below analysts' estimates.

WEAK EARNINGS AND GUIDANCE: Before the market open on Friday, Potbelly reported second quarter adjusted earnings per share of 11c on revenue of $108.1M, missing analysts' consensus estimates of 12c and $109.78M, respectively. Company-operated same-store sales fell 4.9% during the quarter. Looking ahead, Potbelly lowered its full year adjusted EPS view to 30c-33c from guidance of 35c-38c. The guidance compares to analyst estimates of 34c. In addition, the company forecast a full year mid-single digit decrease in company-operated same-store sales, an effective tax rate of 36%-38% and 45-50 total new shop openings, including 30-35 company-operated shop openings in the year. Mike Coyne, Potbelly's Chief Financial Officer and interim Chief Executive Officer, said that "While the overall restaurant operating environment remains challenging and we do not contemplate an improvement in industry trends in our outlook for 2017, we remain confident in the strength of our brand."

STRATEGIC REVIEW: Coyne, who has served as interim CEO since the departure of Aylwin Lewis in July, said in a statement that Potbelly has hired JPMorgan Securities as its financial advisor to assist with a review of "strategic business alternatives." "Potbelly remains open to all strategic options that would potentially significantly enhance shareholder value over the long term," he said, adding that the company will analyze "every aspect" of its business over the next few months, "including, but not limited to, our capital structure and allocation, returns on invested capital, operational productivity, our marketing strategy, the pace of our company-owned unit growth, capital expenditures, and potential ways to accelerate franchising."

WHAT'S NOTABLE: The announcement that Potbelly has hired JPMorgan follows weak first quarter results and a June letter from Ancora Advisers, which owns 4% of Potbelly, urging the company to change its strategy or sell itself. At the time, Ancora said that "We do not believe the current strategy would be attractive for current or potential public/minority shareholders over any investable timeframe."

ANALYST COMMENTARY: Maxim analyst Stephen Anderson kept a Hold rating on the stock but lowered his price target to $11 from $13 following the "disappointing" second quarter results. He said he remains concerned about the company's potential to compete as a value destination or attract new traffic in the near term as consumers shift to Quick Service and Fast Casual peers. However, the analyst said he believes the strategic review, which could include possible refranchising, may limit downside and the announcement signals the company is moving more aggressively toward asset management changes.

PRICE ACTION: Potbelly fell 0.7% to $11.07 in afternoon trading. Shares are down over 14% year-to-date.