Papa John's 3Q profit climbs 40 percent

LOUISVILLE, Ky. - Pizza chain Papa John's International Inc. said its net income grew 60 percent in the third quarter, even as a series of items dragged down the company's adjusted profit.

The pizzeria reported net income of $7.7 million, or 28 cents per share, up from year-earlier net income of $4.8 million, or 16 cents per share.

But excluding a series of items related to the divestitures of dozens of restaurants and the finalization of income tax issues, the company's adjusted earnings fell 18 percent to $7.9 million, or 28 cents per share profit, down from the previous year's adjusted results of $9.7 million, or 32 cents per share.

Meanwhile, revenue climbed 6.6 percent to $280 million against $262.8 million a year earlier.

Analysts surveyed by Thomson Reuters expected the Louisville, Ky.-based company to earn 36 cents per share. Those estimates typically exclude items.

Same-store sales — an important retail industry metric of sales in locations open a year — rose 1.7 percent.

"As with many restaurant and retail brands, we saw a slowdown in our sales starting in September that we believe was largely related to declining consumer sentiment," Papa John's President and Chief Executive Nigel Travis said in a statement. "While this trend continues in the current quarter, we believe in the strength of the Papa John's brand to weather this storm as evidenced by our domestic store growth versus the competition and the continuation of strong international performance during the quarter."

The company said it was also eyeing whether to offer some of its franchise owners financial assistance as credit markets around the globe freeze.

The company said the "incremental support," which includes changing the formula used to determine how much franchise owners pay for cheese, could cut franchisees' food costs by 1.4 percent for the last two months of the year.

"Some franchisees, or prospective franchisees, are experiencing difficulty in obtaining financing from commercial banks for working capital or development purposes," the company said in a statement. "In addition, our franchisees continue to face pressures on operating margins related to increased commodity and labor costs."

Papa John's shares rose 16 cents to close at $22.85 in regular trading Tuesday. The stock fell 27 cents, or 1.2 percent, to $22.58 in aftermarket trading after the earnings report was issued.

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