Papa John’s stops bleeding as sales fall less under new chairman
Papa John’s International Inc.’s sales topped analyst estimates, indicating the pizza seller is getting its mojo back under new management. The stock rose in extended trading.
Comparable sales in North America fell 6.9 percent last quarter, beating projections for a 7.3 percent fall and slowing the recent pace of declines. The results are the first under new chairman Jeffrey Smith.
The chain is pushing to bolster its advertising, and in March brought in a new global marketing head from Subway Restaurants. Papa John’s also recently enlisted NBA legend Shaquille O’Neal as a brand ambassador, director and investor.
“Substantial, positive change takes time and effort,” CEO Steve Ritchie said. Since February, activist shareholder Starboard Value has invested $250 million in Papa John’s and named Smith, Starboard’s chief executive officer, as chairman of the pizza maker. The results signal that Papa John’s is moving past the controversy over founder John Schnatter, who used a racial slur on a conference call last year, taking a toll on the company’s value and reputation.
Still, the incident isn’t totally behind the company, which disclosed $4.9 million in short-term royalty reductions in the quarter to help keep struggling franchises afloat. Separately, the company said Tuesday in an amended annual filing that it found some “material weaknesses’’ in its internal financial reporting controls--but that it won’t have to restate earnings as a result.
The shares jumped as much as 8.4 percent in late trading Tuesday. They have gained 29 percent so far this year, recouping last year’s 29 percent loss.