Papa John’s Shares Jump Despite Missing on Earnings

Shares of pizza restaurant chain Papa John’s saw gains in Tuesday’s trading session despite reporting third quarter earnings that missed expectations.

The struggling chain which has been trying to fix its reputation after ousting its CEO earlier this year over racial remarks, had spent millions during the quarter to fix its image.

Traders may have been optimistic over the company reporting a smaller decline in same-store sales which is a key metric for restaurant brands.

The company reported adjusting earnings of 20 cents compared to the 22 cents that analysts had expected. Revenue at $364 million was also below the $393.7 million expected. Same store sales saw a decline of 9.8% coming in better than the 10.7% decline that analysts waited for.

“During the quarter, we took important actions resulting in improved consumer sentiment and North America comp sales that were slightly ahead of expectations,” Steve Ritchie, CEO of Papa John’s, said in a statement. “While the operating environment remains challenging, these early indicators combined with our strong cash flow give us confidence in the consumer initiatives underway across the Company.”

Company-owned locations had same-store sales fall more 13.2 percent. Analysts had expected just an 11.8 percent decline. Franchised locations posted same-store sales that were down 8.6 percent, while analysts expected a 10.5 percent drop.

The company recently launched a new “Voices” ad campaign. which Ritchie told analysts the company had a “strong positive response” to.

“Employees and franchisees express their appreciation for shedding a light on the real values and people who make up our company. Customers also responded positively which shows that the strategy to move in the new more modern and inclusive marketing direction is the right one,” said the CEO.

Disclaimer: We have no position in Papa John’s Int’l, Inc. (NASDAQ: PZZA) and have not been compensated for this article.