Papa John's April sales drop 7.3%, Q1 revenues down 5.4%

Sept. 11, 2003

LOUISVILLE, Ky. -- The struggle to boost comp-store sales and revenues continues for Papa John's International, Inc. (NASDAQ:PZZA).

According to an April 28 news release, the company's comparable-store sales for April were down 7.3 percent from last year, while overall comp-store sales for the quarter were off 4.9 percent.

First quarter revenues were $232.3 million, down 5.4 percent compared to $245.7 million for the same period in 2002. Net income was $11 million, down 15 percent compared to last year's $12.9 million. Diluted earnings per share (EPS) increased 1.7 percent, however, to 61 cents, versus 60 cents last year.

According to the Wall Street Journal, though positive, EPS was 2 cents below Thomson First Call's consensus estimate of four analysts.

Expecting same-store sales will drop 2 percent to 4 percent for all of 2003, Papa John's revised its EPS forecast the year to a range of $2.20 and $2.26, well below the $2.40 to $2.48 it projected in February.

In the release, Papa John's founder and CEO John Schnatter said that despite current sales woes, the company continues to invest substantially in staff performance initiatives, such as increases in store manager and assistant manager salaries and bonuses.

"These initiatives, while expensive, are working," Schnatter said. "We ... continue to believe these initiatives are vital for the long-term health of our brand."

A total of 26 Papa John's units were opened (three company-owned and 23 franchised), while 20 units closed (three company-owned and 15 franchised Papa John's units and two franchised Perfect Pizza units) during the quarter. As of March 30, there were 2,800 Papa John's units (592 company-owned and 2,208 franchised) operating in 49 states and 11 international markets. The company also franchises 142 Perfect Pizza stores in the UK.

Earlier this week, Papa John's announced the systemwide rollout of its Grilled Chicken Alfredo pizza. The pizza blends grilled, sliced chicken breast and a Parmesan Alfredo sauce. Through May 25, the pizza will sell for $10.99 in most of Papa John's U.S. markets.

Topics: Financial Management , Operations Management , Papa John's , Public Companies

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