Papa John’s International, Inc.’s same-store sales continued their slide in the second quarter.
North America comparable sales were down by 6.1 percent for the quarter that ended on July 1, before the tumultuous month that saw founder John Schnatter step down as chairman of the board, followed by the board distancing the brand from him.
Revenue was down by 6.2 percent to $408 million and net income fell by just under 50 percent to $11.8 million, or 36 cents per share, down from $23.5 million, or 65 cents per share in the quarter ended June 25, 2017.
In a press release announcing the results, president and CEO Steve Ritchie said the chain had begun changing how the company marketed its products, “to refocus on quality and better connect with customers.”
Ritchie became CEO on Jan. 1, when Schnatter stepped down from that role after sparking controversy during a Nov. 1 earnings call by blaming flagging sales in part on the National Football League’s failure to quash players’ protests during the national anthem.
Since then Papa John’s has ceased its sponsorship of the NFL, which replaced it with Pizza Hut.
The latest controversy that resulted in Schnatter’s departure as chairman came after revelations that Schnatter had used a racial slur against African Americans in a conference call. Since then, local sports teams as well as Major League Baseball have distanced themselves from the brand.
“While results have been challenged by recent events, we are committed to these strategic priorities and continue to believe that they will lead to enhanced performance,” Ritchie said.
Reiterating previous comments, Ritchie said in the earnings release: “We have also begun an external audit of Papa John’s culture and will address any improvements that are recommended at its conclusion. Our entire leadership team understands the importance of getting our culture and business improvements right. We have important work ahead of us, and I feel certain that with the collective efforts of our 120,000 corporate and franchise team members that the best days for Papa John’s are ahead.”
The chain saw a net 35 unit openings in the quarter, driven by international openings.
The company revised its earnings-per-share outlook downward to a range of $1.30-$1.80 for the year “as a result of negative sales trends,” according to the earnings report.
Contact Bret Thorn at [email protected]
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