Pizza chain Papa John’s reported stronger than expected earnings for the fourth quarter of 2019 but shares fell on China store closures.
Heidi Chung had the news for Yahoo Finance:
Papa John’s (PZZA) on Wednesday delivered a fourth quarter earnings beat on the top and bottom lines, boosted by strong same-store sales amid a turnaround strategy to reinvigorate the brand.
Here were the main numbers for Papa John’s fourth quarter, compared to Bloomberg estimates:
- Revenue: $417.5 million vs. $403.8 million expected
- Adj. earnings per share: 37 cents vs. 32 cents expected
- U.S. same-store sales: +4.1% vs. +2.3% expected
On Nov. 6, the pizza chain announced a big management shake-up meant to stabilize the company after a turbulent period sparked by the messy ouster of its founder, John Schnatter. Papa John’s described the overhaul as a way to promote a “new, more streamlined senior management team…[that] aligns with the company’s new strategy and priorities.”
Ahead of its fourth quarter earnings report, Papa John’s stock has risen 60% over the past 12 months — outperforming a broader market that’s jumped nearly 12% in the same time period. The stock, which closed lower on Tuesday at $67.35, rose in pre-market trading.
CNBC’s Kate Rogers focused on the coronavirus-linked share price news:
Papa John’s shares tumbled more than 10% Wednesday after the company said it has temporarily closed 50 franchised stores in China as a result of the coronavirus and reported a decline in same-store sales for the year.
The company has seen a countrywide sales impact year to date, with sales in China down mid- to low double digits year over year, CEO Rob Lynch said in an interview with CNBC.
And while the company reported its second straight quarter of same-store sales growth in North America with an increase of 3.5%, full-year same-store sales growth in the region still fell 2.2%. Meanwhile the company is grappling with an increasingly competitive fast food landscape where food beyond pizza is readily available for delivery at the drop of a hat.
Shares were down 10.5% to $60.41 in midday trading, and closed down nearly 9%.
“Almost 10% of our international footprint is in China, and we are doing everything we can to support our franchisees and our teams in that region,” Lynch said.
Lynch said Wednesday on “Closing Bell” he was surprised by the sell-off in the company’s stock. “We feel like our business is in great shape. We’re in full turnaround mode,” he said.