Papa John's International Inc. reported higher second-quarter revenue on new locations and positive same-store sales, but said it continues to be pressured by competitor discounting.
For the June 27-ended second quarter, Papa John’s net income was $13.2 million, or 49 cents per share, compared with $14.2 million, or 51 cents per share, in the year-earlier period. Excluding the impact of consolidating BIBP Commodities Inc., the chain’s franchisee-owned purchasing cooperative, Papa John’s earnings per share in the second quarter would have totaled 43 cents, compared with 36 cents a year earlier.
Revenue in the second quarter rose 4.5 percent to $280.6 million, compared with $268.5 million in the second quarter of 2009. The 3,516-unit chain’s top line benefited from 25 net restaurant openings worldwide during the quarter and a 12-percent increase in international franchised-restaurant sales.
Domestic systemwide same-store sales increased 0.4 percent in the second quarter, reflecting a 1.1-percent decrease at corporate units and a 0.9-percent gain at franchised restaurants. Papa John’s said gains in guest counts for both the second quarter and the first half of 2010 were offset by a lower average check resulting from higher levels of discounting.
Papa John’s said it expects the pizza segment’s current discounting and promotional environment — in which Papa John’s promoted a $10 large pizza to compete with Pizza Hut’s any-size-pizza deal for $10 and Domino’s offer of two medium, two-topping pizzas for $5.99 each — to continue pressuring margins for the balance of 2010.
“We had a solid second quarter with our system posting positive transaction growth for the fifth consecutive quarter, as well as positive comp sales this quarter,” said Jude Thompson, president and co-chief executive officer of Papa John’s. “We are pleased with our system’s performance in what continues to be a challenging competitive environment.”
The company narrowed its earnings guidance slightly for 2010, saying it now expects per-share earnings between $1.74 and $1.82, compared with a previously stated range between $1.72 and $1.87 per share. Papa John’s also revised its 2010 same-store sales guidance from between negative 1 percent and positive 1 percent to a range between negative 0.5 percent and positive 1 percent.
Louisville, Ky.-based Papa John’s operates 619 restaurants and franchises another 2,897 locations in all 50 states and 28 foreign countries.
Contact Mark Brandau at [email protected].
