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Papa John's issues downcast '09 outlook

LOUISVILLE Ky. Papa John’s International Inc. said this week its 2009 profit could fall as much as 21 percent from expected earnings this year as sales continue to slow and the chain closes more locations than it opens in the United States.

One-time charges from steps the franchisor is taking to help franchisees survive this tough economic cycle, like financing aid and royalty relief, also will hurt 2009’s per-share earnings by between $12 million and $14 million, or 30 cents to 35 cents per share, the company said.

Next year, Papa John’s expects to earn between $1.32 per share and $1.40 per share, down from projected earnings this year of $1.68 per share. The guidance excludes the results from Papa John’s franchisee-owned cheese purchasing company, which the franchisor is required to consolidate into results.

Revenue for 2009 is expected to remain unchanged from this year, the company said. While aided by new unit openings abroad that will drive overseas sales growth by as much as 30 percent, corporate revenue will be hurt by restaurant closures in the United States, refranchising efforts and U.S. same-store sales that are projected to come in either flat from 2008 or down 2 percent.

The company said it expected a net decline of between 50 and 70 units in the United States for 2009. Through the nine months ended in September, Papa John’s and its franchisees closed 63 locations, but opened 81 restaurants, for a net increase of 18 units. Worldwide, the Papa John’s Pizza chain totals 3,317 locations.

Papa John’s recently said that brand founder John Schnatter would return to the post of chief executive as Nigel Travis departed to Dunkin' Brands.

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