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Papa John's (PZZA) Q3 2019 earnings fall short, but revenue beats


Papa John's International Inc. signage is displayed on top of a delivery vehicle outside of the company's restaurant in Nashville, Tennessee.

Luke Sharrett | Bloomberg | Getty Images

Papa John's stock jumped more than 6% in afternoon trading Wednesday after the pizza chain announced an executive reshuffle and reported quarterly revenue that topped Wall Street's estimates.

Same-store sales in North America turned positive for the first time in two years, growing by 1%.

"We're finally starting to turn a corner on some of the challenges that we've faced over the last couple of years," CEO Rob Lynch said in an interview. "... But I absolutely wouldn't say that we're out of the woods."

Shares of the pizza chain, which has a market value of $1.8 billion, were up 43% this year, as of Tuesday's close.

Chief Financial Officer Joe Smith will leave the company in 2020 after nearly 20 years at the company. He will remain in the role until Papa John's finds a successor.

Chief Operating and Growth Officer Mike Nettles and Chief Marketing Officer Karlin Linhardt will also be departing after a transition period.

The departures come as Papa John's switches up its management structure.

Lynch, who has been at the helm for two months, said in an interview that the company has lacked focus in the last few years as executives have been trying to stabilize the business. The new management team will be 9 people, down from 16.

Prior to joining Papa John's to replace CEO Steve Ritchie, Lynch led a turnaround at Arby's by improving operations, creating new menu items and using fun marketing to catch customers' attention.

"It's kind of the same playbook, and hopefully we get the same results that we got at Arby's," Lynch said.

Max Wetzel will join the company as chief commercial and marketing officer. Wetzel served as chief transformation officer and vice president of consumer brands at PPG Industries, a paint supplier.

Nettles' job as chief operating and chief growth officer will be split into two roles. Jim Norberg, who is currently the company's head of restaurant operations, will take over as chief operating officer for North America. Jack Swaysland has been named chief operating officer for international markets.

Papa John's also announced its fiscal third-quarter results Wednesday. Net sales rose 4.8% to $403.7 million, topping estimates of $386.9 million.

Papa John's reported fiscal third-quarter net income of $385,000, or a loss of 10 cents per share, up from a loss of $13.3 million, or 42 cents per share, a year earlier.

Excluding financial assistance to North American franchisees and other items, the pizza chain earned 21 cents per share, falling short of Wall Street's expectations of 23 cents per share.

Read the full earnings report here.


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