Papa John’s Tumbles Most Since 2018 on Dim Store Growth, Virus
Papa John’s Declines Amid Dim Store Growth View, Virus Concerns
(Bloomberg) -- Papa John’s International Inc. fell after the pizza chain reported earnings that suggest little growth for its North American locations this year, along with concerns about the coronavirus that’s quickly becoming a threat to the global economy.
While North American same-store sales rose 3.5% last quarter and exceeded analysts’ predictions, the chain isn’t planning on increasing its net store count this year at home, Chief Executive Officer Rob Lynch said in an interview. Last year, it shuttered 128 stores in North America for a net unit loss of 49 as franchisees struggled with sales slumps.
Papa John’s is fighting its way back from a scandal with former CEO and founder John Schnatter, which hurt sales and badly damaged the company’s reputation. It has worked to speed up service and teamed up with companies like DoorDash Inc. to get pizza to diners faster. But it’s also facing an unrelenting labor market and higher costs to hire and keep employees, especially delivery drivers.
Meanwhile, the pizza chain has temporarily closed about 50 stores in China due to the coronavirus outbreak there. It has a total of 210 locations in the nation, many of which are in shopping malls and public venues that have shuttered in the past month.
“If the government is dictating that these communities kind of stay in and stay quarantined, that’s definitely going to have an impact,” Lynch said. “Everyone is monitoring it. I feel more confident because we actually have people on the ground in these markets letting us know how things are going.”
Papa John’s shares fell as much as 10% to $60.35 in New York Wednesday, the biggest intraday drop in 15 months. They had gained 6.7% this year through Tuesday’s close.
The company also forecast profit for the current year, excluding some items, of $1.35 to $1.55 a share. The $1.45 midpoint of that range missed the average of analysts’ estimates.
To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net
To contact the editors responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net, Lisa Wolfson, Jonathan Roeder
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