Papa John's net falls 5% in first quarter

by Eric Schroeder
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LOUISVILLE, KY. — Net income at Papa John’s International, Inc. fell 5% to $16,875,000, equal to 62c per share on the common stock, in the first quarter ended March 28. This compared with income of $17,839,000, or 65c per share, in the same period a year ago. Net sales, meanwhile, rose to $285,786,000 from $280,924,000.

“We are pleased with our first-quarter results,” said John Schnatter, chairman and chief executive officer. “Even in the face of an extremely challenging competitive environment, our system posted positive transaction growth for the fourth consecutive quarter. We continue to reinforce and execute against our quality brand positioning, which has stood the test of time as a sustainable and winning long-term strategy.”

Domestic company-owned restaurant operating income totaled $11,445,000 in the first quarter, up from $10,391,000 a year ago. Papa John’s said the increase reflected lower commodity costs and the benefits from increased customer traffic as well as labor efficiencies from recently implemented initiatives. The benefits were partly offset by a lower average ticket price.

Internationally, Papa John’s sustained a loss of $1,103,000, which compared with a loss of $777,000 a year ago. The company attributed the decline to increased personnel and franchise support costs, and start-up costs associated with Papa John’s company-owned commissary in the United Kingdom that will open in the second quarter of 2010.

Papa John’s raised its guidance for 2010 full-year earnings per share to $1.72 to $1.87 per share from $1.70 to $1.90 previously.

“We updated the guidance based on both solid first-quarter results and on the continued aggressive pricing and promotional environment in the pizza category, which we expect will result in continued restaurant margin pressures,” the company said. “We also expect increased marketing expenditures throughout the remainder of the year.”
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