Q3 revenue up 2.8% at Papa John's Pizza, Oct. comps drop 1.8%

Oct. 31, 2006
LOUISVILLE, Ky. — Revenue and profits rose modestly at Papa John's International for the three months ended Sept. 24.
According to a regulatory filing, revenue was $239.7 million, up 2.8 percent compared to $233.1 million for the same period in 2005. Net income was $13.1 million versus $10.8 million last year. The company attributed the boost to increases in commissary sales and domestic franchise royalties.
For the first three quarters of the year, revenue was $723.6 million, basically flat compared to 2005. Net income was $44.4 million versus last year's $31.6 million.
"Our third quarter results were very good, with our system continuing to outperform the competition in a very challenging environment," said Nigel Travis, Papa John's president and chief executive officer.
International performance continues to be a challenge for the company. Overseas operations (which excludes the Perfect Pizza operations in the United Kingdom that were sold in March) lost $2 million and $6.8 million for the three- and nine-month periods ended Sept. 24. Compared to the same periods in 2005, it lost $1.2 million and $2.7 million respectively. The chain attributed the negative results to rising investments in its overseas support infrastructure.
During a Nov. 1 investor analyst call, Travis said the company will continue to "investment spend" in international markets in hopes of solidifying performance. Travis said the company has not abandoned Mexico, where it recently closed three-dozen units.
"To say we're pleased we closed 34 stores sounds ridiculous, but it's true. ... We were essentially going nowhere there," Travis said. The closures, he said, were necessary to refresh the brand for a renewed assault south of the border. The company is "very close to signing on two significant franchisees in Mexico ... in the next few weeks," he added.
During the call, the company reported comparable-store sales for October slipped 1.8 percent, ending a 22-month streak of positive comps.
Order-ahead sales through its online portal exceeded 3,300 on Halloween, one of the busiest days of the year for pizza operations.
David Flannery, the company's chief financial officer, also said Papa John's will begin reporting quarterly comparable sales reports rather than monthly numbers. Since going public in 2005, Domino's Pizza has reported only quarterly numbers, and Yum! Brands, owner of Pizza Hut, reported in September that it would begin reporting only quarterly numbers.

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

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