Papa John's cut its outlook for the year and suspended its dividend, as the pizza chain's North American business continues to face a soft consumer environment.
Chief Executive Todd Penegor said Thursday that the company is working to turn around the business, though he noted that efforts to improve supply chains and the customer ordering experience are taking longer than anticipated.
In the meantime, Papa John's board has decided to suspend the company's quarterly dividend, beginning in the third quarter. Penegor said the move will provide greater flexibility to make necessary investments and maintain a strong balance sheet.
Shares fell 6.7%, to $27.75, in premarket trading.
Papa John's now expects global, system-wide restaurant sales to fall between 2% and 4% this year, compared with a prior forecast for sales to be flat or down in the low-single-digits.
The new outlook assumes North American comparable sales will now decline 6% to 8% this year, compared with prior guidance of down 2% to 4%. The company also tempered its international comparable sales outlook to up 1% to 3%, from up 2% to 4%.
For its three months ended June 28, Papa John's posted net income of $8.7 million, or 24 cents a share. That compared with $9.67 million, or 28 cents a share, in last year's comparable quarter.
Stripping out one-time items, earnings were 46 cents a share. Analysts polled by FactSet expected adjusted earnings of 45 cents a share.
Total revenues fell 8.8% to $482.4 million, roughly in line with Wall Street models.
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