Competitive environment results in disappointing third quarter
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Hoping to find traction in the increasingly competitive pizza space, Papa Murphy’s Holdings Inc. said it plans to launch its first-ever national advertising campaign next year after swinging to a loss in the third quarter, the company said Wednesday.
Papa Murphy’s systemwide domestic same-store sales for the Sept. 26-ended quarter plunged 5.8 percent, including a 5.6 percent drop at domestic franchised units, and a 7.7 percent decline at company-owned locations.
Revenues increased 1.4 percent to $28.5 million, but the Vancouver, Wash.-based chain recorded a net loss of $421,000, or loss of 3 cents per share, compared with net income of $1.1 million, or 7 cents per share, a year ago.
“We had a disappointing quarter, as the increasingly competitive environment, both in the pizza category and more broadly, magnified the effects of lower absolute media levels in this Presidential election year,” said Ken Calwell, Papa Murphy’s president and CEO, in a statement. “In spite of the near-term challenges, we believe our long-term strategies, including appropriate new store openings, continue to be on point and will drive top line growth and profitability going forward, both for our franchisees and shareholders.”
The company amended its credit facility to launch a national ad campaign in 2017 with at least six weeks of television advertising.
“We consider this to be a significant step forward in creating a truly national brand,” Calwell said. “And, not only do we believe national media to be an effective driver of pizza sales, we also expect increased brand awareness to have a positive impact on franchise sales.”
The company, however, downgraded its guidance for the year, saying domestic systemwide same-store sales would likely decline between 4.5 percent to 5 percent, versus earlier projections of a 2-percent to 3-percent decline.
At the end of the quarter, Papa Murphy’s included 1,582 locations globally, including 1,375 franchised, 166 company-owned and 41 international locations.
Contact Lisa Jennings at [email protected]
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