Shares of Papa John's International, Inc. (NASDAQ:PZZA) slid last month as the pizza-delivery chain reported disappointing third-quarter earnings results and feuded with the National Football League over player protests. According to data from S&P Global Market Intelligence, the stock finished November down 14%.
Papa John's announced its third-quarter results after hours on Oct. 31, and the stock promptly fell the next day, giving up 8%. The pizza chain did beat top-line estimates, but domestic comparable sales growth of just 1%, a guidance cut, and CEO John Schnatter's decision to blame the NFL caused investors to flee. Growth in the international segment, which makes up about a third of total restaurants, was solid, with comparable sales up 5.3%.
The bulk of losses came at the beginning of the month, following the earnings release.
Overall revenue in the period increased 2.2% to $431.7 million, topping estimates at $426.7 million, while earnings per share ticked up from $0.57 to $0.60, matching expectations. However, the company also attacked the NFL, saying that the protests had hurt sales, and Schnatter accused the league of poor leadership, a bizarre move that led to mockery from other pizza chains and the company's apology for the remarks the following week. Papa John's has been the NFL's official pizza sponsor since 2010.
The stock continued to slide after the earnings report came out as Papa John's was criticized on social media for attacking the NFL. Investors also sold the stock off in response to its weak outlook, with the company now calling for full-year comparable sales growth of just flat to 1.5% versus prior guidance of 2%-4%. It also lowered EPS growth guidance from 8%-12% to a range of just 3%-7%. Other pizza chains, such as Domino's, have fared better of late, and Papa John's could simply be succumbing to the restaurant recession, which has seen much of the industry struggle over the past year and a half. Either way, it's not a surprise to see the stock slide after slashing guidance like that.