Papa John’s shares plummeted by more than 10 percent in aftermarket trading Tuesday after the company told investors that its pizza sales would be significantly worse than previously forecast for the year.
The company lowered its outlook for same-store sales, saying executives now expect sales at stores open for at least a year to fall between 7 percent and 10 percent this year. The company previously estimated that they would fall by 3 percent at the most. The company, which released its second-quarter earnings Tuesday, also missed Wall Street revenue and profit estimates.
Investors were waiting to see how much damage the company has sustained following a very public and nasty feud with founder John Schnatter that started last month. Shares were already down more than 17 percent since he was forced to give up his post as chairman July 11 after admitting to using a racially charged slur on a conference call in May.
The company reported adjusted second-quarter earnings of 49 cents per share on $408 million in revenue, missing estimates of 54 cents per share on $425.5 million in revenue, according to Thomson Reuters estimates.
Papa John’s stock has been battered since its founder admitted to using a racially charged slur on a conference call and its sales aren’t faring any better.
Same-store sales fell 6.1 percent in the quarter, worse-than the down 4.9 percent Wall Street had predicted, according to StreetAccount.
And, future same-store sales could be even worse. Peter Saleh, analyst at BTIG, estimates that same-store sales in the third quarter will be down 9.1 percent. However, Stifel’s analyst Chris O’Cull, projects that the metric could be down as low as 12 percent.
One franchisee, who asked not to be named, said sales at his shops have fallen between 5 and 20 percent, depending on the location, since the founder’s admittance.
After the earnings release, Papa John’s will hold a conference call where CEO Steve Ritchie will take questions from analysts.
