Papa John’s Moves Past Schnatter Turmoil, Hits Record High
(Bloomberg) -- Papa John’s International Inc. shares hit an all-time high, a sign the company has recovered from the controversy generated by its former chairman.
The pizza chain’s stock rose as much as 4.3% to $92.58 in New York, surpassing the previous intraday high set in December 2016. The shares have risen about 46% in 2020 -- making Papa John’s a rare instance of restaurant success amid the upheaval of Covid-19.
In June, Papa John’s reported a third consecutive month of double-digit growth for same-store sales -- a key metric of restaurant performance. Expansion in North America reached 24% for the five weeks that ended June 28.
“Those are huge numbers,” said Brian Yarbrough, an analyst with Edward Jones. Before Covid-19, pizza chains were seeing monthly same-store sales growth of about 3% to 5%, he said.
The gains show how the company’s fortunes have rapidly shifted following controversies in recent years generated by its founder John Schnatter. These include the use of a racial slur on a conference call, lawsuits with the company and a feud with the NFL over players’ kneeling during the U.S. anthem to protest police brutality against Black people.
Schnatter, who for years served as the company’s chief executive officer and chairman, has said the slur was taken out of context and that he’s the victim of a smear campaign. He has vowed to set the record straight. Schnatter, one of the company’s largest shareholders as of March filings, has since sold more shares and is no longer in the top 10, a spokeswoman for Papa John’s said.
Amid cratering sales and a slumping stock, activist investor Starboard Value LP took a stake in Papa John’s last year, leading to an overhaul of management and its board, with former Arby’s executive Rob Lynch taking over as CEO. The company also added NBA hall of famer Shaquille O’Neal as an investor and board member.
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