Papa John’s (PZZA) reported a beat on the top line and a miss on the bottom line during its third quarter. Same-store sales in the U.S. beat expectations, and the pizza giant reiterated its full-year adjusted EPS guidance. Shares of Papa John’s soared 8% in early trade Wednesday on the news.
Here were the numbers for Papa John’s third quarter, compared to Bloomberg-compiled estimates:
Revenue: $403.7 million vs. $384.6 million expected
Earnings per share: 21 cents vs. 22 cents expected
North America same-store sales: +1% vs. -0.6% expected
International same-stores sales: +1.6% vs. +1.6% expected
Papa John’s still expects full-year adjusted earnings per share between $1 to $1.20. The company updated its full-year North America same-store sales forecast and now expects growth between -1.5% and -3.5%. It previously anticipated -1% to -4% same-store sales growth in North America. Internationally, the company said same-store sales will be flat to +2% in 2019.
“We are very pleased to have positive comparable sales in North America for the first time in two years. I have spent a large part of my first two months meeting with our franchisees, team members, and other key stakeholders,” CEO Rob Lynch said in a statement. “We are all focused on the right things – reinforcing the quality of our food, improving our unit economics, and promoting a company culture that sets us up to win for years to come. While there is much work to do, we have put in place a clear strategic roadmap to align the interests of our customers, employees, franchisees, and shareholders. Our strategic priorities will guide our path to a brighter future.”
Management shakeup
Ahead of the earnings results, Papa John’s announced a massive c-suite overhaul. After serving as chief financial officer since April 2018, the company said Joe Smith will be stepping down in 2020. No replacement was named. In addition, Chief Operation and Growth officer Mike Nettles and Chief Marketing Officer Karlin Linhardt will also be departing the company to “pursue other opportunities,” according to a statement.
Beginning November 18, Max Wetzel will join Papa John’s as the chief commercial and marketing officer. Wetzel was previously PPG Industries vice president of consumer brands and chief transformation officer.
“I’m very excited to welcome Max Wetzel to the Papa John’s team,” Lynch said in a statement. “A transformational leader, Max earned a reputation as a strategic and growth-oriented consumer marketer during his career at H.J. Heinz and most recently, PPG. Now, as our new Chief Commercial and Marketing Officer, he will lead the company’s efforts to reestablish the superiority of our pizza with consumers across our various customer platforms.”
Papa John’s had new leadership about halfway through the third quarter. Rob Lynch was appointed president and CEO on August 27 and succeeded Steve Ritchie. Ritchie was a long-time veteran of the company and served as CEO for an abrupt 18-month period. Lynch was an outsider and previously was the President of Arby’s before assuming the new role at Papa John’s. He also previously held leadership positions at Procter & Gamble and Taco Bell.
It has been a tumultuous couple of years for Papa John’s, as the company looks to turn around a tainted brand image and grow sales. Founder and former CEO John Schnatter drove the pizza brand’s image into the ground after spewing multiple controversial comments. Schnatter resigned as CEO in December 2017, then resigned as chairman July 2018 and officially exited the board in March 2019.
Since then, Papa John’s has been furiously attempting to boost sales and regain lost customers in a fiercely competitive fast-food environment. Beloved NBA star Shaquille O’Neal was appointed to Papa John’s board at the end of March, and since then, management has expressed its devotion to rebuilding a damaged image and brand.
Shares of Papa John’s have soared 45% this year and have outperformed the broader market (^GSPC) which rose 25% in the same time period.
The company’s earnings conference call kicks off at 10 a.m. ET.
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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