Papa John’s Int’l Inc. (NASDAQ: PZZA) reported its first quarter financial results for the fiscal year. The company missed estimates in both revenue and earnings, and also reported continued declining sales. Shares fell by 6 percent shortly after the opening bell on Wednesday.
For the first quarter, Papa John’s reported revenue of $427.4 million, falling 4.9 percent year over year and missing FactSet’s estimates of $442 million. The company reported net income of $16.7 million or 50 cents per share, down from $28.4 million or 77 cents the same quarter last year. FactSet consensus forecasted an EPS of 62 cents.
Papa John’s comparable sales continued to decrease in North America, falling 5.3 percent in the quarter, much higher than analysts’ estimates of 4.8 percent. The company said that sales were lower due to North America commissary sales due to lower volumes.
Papa John’s rivals, Pizza Hut and Dominos aggressively pushed out promotions and specials which drew in more customers. Pizza Hut’s same store sales increased by 1.8 percent in the first quarter, while Domino’s saw its same store sales jump by 8.3 percent.
“Although first quarter results were lower than the prior year, they were consistent with our expectations. We remain focused on enhancing our value perception and driving our strategic initiatives,” said Steve Ritchie, President and Chief Executive Officer of Papa John’s.
Papa John’s has been struggling to retain customer spending due to the very competitive industry. The company has been struggling to launch deals and initiatives to top other competitors, but even then, it has been seeing declining sales since 2016, under former CEO John Schnatter.
Schnatter stepped down as CEO because of pressure from investors after his remarks about the NFL protests causing Papa John’s sales to decline. Ritchie, previously Chief Operating Officer, succeeded Schnatter last year December.
NFL players protested against police brutality during this past season by kneeling during the national anthem. The protests angered many Americans, causing a sudden drop in viewers. Schnatter blamed the protests for the company’s declining sales because the NFL is its top sponsor.
In the earnings call, Ritchie said he intends to stay associated with NFL by launching new initiatives to retain and grow its customer base. Ritchie then goes on to say that the company’s sponsors and advertisers cannot be solely focused on sports or the NFL.
Ritchie is also planning to reshape the company into more technology-based, as he plans to invest more into tech and how the company advertises to consumer.