LOUISVILLE Ky. Papa John’s International Inc. upped its expectations for annual earnings by two cents per share as the company said it has seen positive transaction momentum, market share gains and improved restaurant profitability.
The company, which operates or franchises 3,458 pizza restaurants worldwide, increased its annual per-share earnings guidance to between $1.42 and $1.46, up from previous expectations of earnings between $1.38 and $1.44 per share.
The 2009 guidance includes a negative impact of 35 cents from franchisee-support incentives celebrating the chain’s 25th anniversary, as well as restructuring costs from a round of layoffs at the company’s Louisville headquarters in September.
In 2008, the company reported earnings of $1.68 per share.
“The investments we have made in our system over the last 12 months continue to pay dividends for our brand, including in the areas of positive transaction momentum, market share gains and restaurant profitability,” said John Schnatter, the chain’s founder, chairman and chief executive.
For the third quarter ended Sept. 27, Papa John’s booked profit of $11.7 million, or 42 cents per share, compared with $7.7 million, or 28 cents per share, in the same quarter a year ago.
Latest-quarter revenue totaled $263.9 million, a 5.7-percent decrease from a year earlier.
Papa John’s domestic systemwide same-store sales remained flat, reflecting a 0.6-percent decline at corporate units and a 0.2-percent increase at franchised locations. It said positive traffic trends have continued in October, the first month of the current fourth quarter. The company raised the 2009 guidance on its domestic same-store sales and now expects results to hit a range of between a 0.25-percent decrease and a 0.25-percent increase.
During the third quarter, Papa John’s opened 61 restaurants and closed 21 units worldwide. The company said its total domestic development pipeline included about 200 restaurants scheduled to open over the next 10 years, many in accordance with the 25th anniversary franchisee-support incentives.
The company expects to reach the low end of its 2009 guidance of 100 net unit openings, mostly due to the termination of a third-party sponsorship agreement for non-traditional units. Twenty-six of those venues are expected to close in the fourth quarter.
“These units were event-driven and, accordingly, had relatively low sales volumes as compared to our traditional units,” Papa John’s said in a statement. “These closings will not impact our future earnings.”
Papa John’s has waived the franchise fee and royalties for the first 12 months for new franchisees this year, and the brand also is offering a $10,000 bonus for franchisees that open new stores ahead of schedule.
Contact Mark Brandau at [email protected].