Papa John's revises full-year profit outlook

LOUISVILLE, Ky. - Pizza chain Papa John's International Inc. said it may post lower-than-forecast full-year earnings if it offers its franchise owners financial assistance to help withstand the credit crunch and global economic slowdown.

The Louisville-based chain has previously said it expects to earn between $1.68 per share and $1.76 per share for the full year.

But executives said Tuesday that they would likely post full-year earnings near the low end of the range because they were changing the formula used to determine how much franchise owners pay for cheese, which could cut franchisees' food costs by 1.4 percent for the last two months of the year.

And they said further financial assistance could cut into full-year earnings and 2009 results.

For the first nine months of the year, the company's per-share profit rose to 84 cents.

"We believe any such short-term actions would produce long-term shareholder benefits by mitigating potential unit closures," the company said.

Analysts surveyed by Thomson Reuters expect the company to earn $1.72 per share for the full year.

Officials said they also expect full-year domestic same-store sales, which slipped in September and October, to be near the low end of their forecasted growth of 1.25 percent to 2.75 percent.

Also Tuesday, the chain said it earned $7.75 million, or 28 cents per share, for the three months ended Sept. 28. That compares with a year-ago profit of $4.83 million, or 16 cents per share.

Third-quarter revenue climbed nearly 7 percent to $280 million.

Papa John's shares rose 16 cents to $22.85 in trading Tuesday.

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