LOUISVILLE, Ky. (WDRB) — Papa John's International Inc.'s shares fell nearly 9% Wednesday after the Louisville-based pizza chain said concerns about the coronavirus prompted the closure of 50 franchised restaurants in China.
The plunge came even as the company reported its best comparable sales figure in three years.
Sales at North American restaurants -- the company's most closely watched metric -- grew 3.5% in the final three months of 2019 compared to a year earlier. The growth was measured relative to a turbulent period when the company's sales had suffered in the aftermath of its dismissal of founder John Schnatter in mid-2018.
"We’ve got a great team in place that is focused on the future, and we are just getting started," said Papa John's CEO Rob Lynch, who assumed the role in August and remade the company's C-Suite.
As expected, the company suffered its second-consecutive year of sales declines, both at comparable restaurants and in absolute dollars.
Papa John's projects to return to growth in 2020, with comparable sales rising by 2.5% to 5%.
Coronavirus concerns
Papa John's disclosed the coronavirus-related store closings in filings with the Securities and Exchange Commission.
"We currently have approximately 50 franchised stores closed in our China market due to the impact of the coronavirus," the company said. "Although the impact of these stores is not currently material to our results of operations, at this point in time, there is significant uncertainty relating to the potential effect of coronavirus on our business."
But in a note to clients, Stifel analyst Chris O'Cull suggested that the stock selloff was actually related to the company's projections for 2020 profitability, which were not as optimistic as Wall Street had forecast.
In its fourth-quarter report, Papa John's said it had a loss of 18 cents per share. Adjusted for non-recurring costs, earnings came to 37 cents per share.
The results beat Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 32 cents per share.
The pizza chain posted revenue of $417.5 million in the period, also surpassing Street forecasts. Five analysts surveyed by Zacks expected $406.5 million.
The Associated Press contributed to this report.
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