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Papa John's logs 2nd quarter of positive comp sales, loses on year

Papa John's closed the books on a tough 2019 this morning with annual losses, but glimmers of hope in its second straight quarter of comp sales increases.

Logo: Provided

February 26, 2020

As Papa John's plodded along on what it hopes is the road to brand recovery, it made some significant gains, but still lost financially on the year amid new leadership, a near constant barrage of barbs from its ousted founder and former CEO, and a revamp of its culture. But despite all the challenges, the brand still managed to pull off its second straight quarter of positive comp sales. 

For the 2019 fiscal year and fourth quarter periods that both ended on Dec. 29 last year, the company reported in its SEC filing this morning that its Q4 North American comp sales grew 3.5%. But on a full-year basis for 2019, the Louisville, Kentucky-based company watched its com sales drop 2.2%.

The company reported that for FY 2019, it lost 24 cents per diluted share, with adjusted earnings per diluted share — excluding the impact of special items — of $1.17, after the previous year's earnings per diluted share of 8 cents and adjusted earnings per diluted share of $1.37. 

Other highlights, include: 

• Q4 2019 loss per diluted share was 18 cents (versus 41 cents loss for same period in 2018). 
• Q4 adjusted earnings per diluted share, excluding special items, was 37 cents (versus 18 cents in same period of 2018).
• 2.2% comp sales decrease for FY2019.
• 1.1% international comp sales increase for FY2019. 
• 2.4% international comp sales increase for Q4 2019. 
• 52 net unit openings in Q4.
• 92 net unit openings FY2019, driven by international. 

"Papa John's accelerated its turn-around in the fourth quarter with a second consecutive quarter of positive comparable sales, positioning us for a strong start to 2020," Papa John's President and CEO Rob Lynch told investors in the report this morning. "The company's new focused priorities and a more inclusive, winning culture are empowering our team members to innovate our products and marketing, drive sales growth, improve efficiencies and achieve better results for all of our stakeholders. Our 2020 plan accelerates this momentum, as we work to become the world's best pizza company and deliver strong, long-term profit growth."

2019 Q4 consolidated revenues grew 5% to $19.9 million, compared to Q4 2018. In fact, without the financial impact of refranchising 46 domestic restaurants and a quality control center in Mexico last year, the company said consolidated revenues increased approximately $30.9 million, or 8%, for the last quarter, primarily due to a 4.1% increase in comp sales domestically, as well as the beneficial impact of expiring customer rewards associated with the brand's Papa Rewards loyalty program. 

Similarly, the brand's North America commissary revenues grew, royalty and fees grew with positive comp sales, and international revenues also grew due to positive comp sales and other factors. But negative North American comp sales last year lent to an annual drop in consolidated revenues of 2.6% to $43.6 million, along with a $3.7 million increase in royalty relief for the year.