New pizzas push Papa John's Oct. sales up 4.5%, but other struggles continue

Oct. 28, 2003

LOUISVILLE, Ky.—Papa John's International, Inc., which has fought to reverse a nearly two-year-long comparable-store sales slide, saw its October comp-store sales rise 4.5 percent following the systemwide introduction of two new barbecue chicken pizzas.

According to a news release, domestic systemwide comp-store sales for the third quarter, ended Sept. 28, decreased 4.8 percent (consisting of a 4.1 percent decrease at company-owned stores and a 5 percent decrease at franchise stores).

For the nine months ended Sept. 28, domestic systemwide comp-store sales also decreased 4.8 percent (consisting of a 4.7 percent decrease at company-owned units and a 4.9 percent decrease at franchise units).

Store operating margins dropped nearly 6 percent during the third quarter due to increases in salaries and benefits, advertising and occupancy costs.

Papa John's international arm struggled similarly in the period. International revenues were $7.6 million, compared to $8 million in 2002.

International operating margins decreased to 13.2 percent in 2003, from 15.6 percent in 2002, primarily due to lower margins and increased distribution costs associated with the UK commissary operation.

Papa John's attributed this year's sales declines to continued weakness in the delivery and carryout pizza segment, as well as the competitive pricing and promotional environment. Citing "industry sources," the company said transaction counts in the quick-service pizza segment dropped 2.8 percent during June, July and August.

The company predicts few changes for the fourth quarter. "Given the current industry and overall economic environment, management cannot predict when operational improvements resulting from these initiatives, or otherwise, may result in consistently improving sales trends, although October results ... are encouraging," the release read.

As of Sept. 28, there were 2,942 Papa John's/Pizza Perfect units in the company's system.

Topics: Papa John's , Public Companies

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