News

Papa Murphy's struggles in Q3, board considers options including sale

November 8, 2018

Papa Murphy's leadership released disappointing Q3 financial results along with news that the company's board is considering actions to "enhance shareholder value," including selling the business. Results for the third quarter that ended Oct. 1 show the business is struggling, but a news release said its board is now considering "a range of financial and strategic alternatives to enhance shareholder value."

Key Q3 highlights, include: 

• Revenue fell to $28.8 million this year's quarter, compared to $33.7 million last year.
• Comparable store sales decreased 2.1 percent from last year's quarter, including a 6.9 percent drop at company-owned locations and 1.8 percent decrease at franchised stores. 
• $0.6 million net loss reported, or $0.04 per diluted share, compared to $2.7 million loss last year's quarter, or $0.16 per diluted share.
• Adjusted EBITDA was $4.7 million, compared to $5.5 million the prior year's quarter.

"While the third quarter same store sales percentage is still negative, the third quarter result represents our best percentage change in same store sales in 12 quarters," CEO Weldon Spangler said in the release. "We are also pleased to note that sales trends have continued to improve and are currently tracking slightly positive through the first five weeks of the fourth quarter, though we maintain a conservative outlook for the balance of the fourth quarter. The comp sales result continues to be driven by the adoption of key marketing messages, as well as by progress on our strategic initiatives."

Papa Murphy's also announced it's looking at strategic alternatives to make the brand more successful, including selling the business. To that end, it's working with North Point Advisors and leadership said the company is open to all strategic options to grow long-term shareholder value.