I was wrong, Papa John's (NASDAQ:PZZA). I didn't think you stood a chance for a strong September. Domino's Pizza (NYSE:DPZ) was running with the free Fudgems brownies promotion. The perpetually innovative Pizza Hut, one of the three horsemen in the Yum! Brands (NYSE:YUM) family, is pitching its unique lasagna pizza.
So how did Papa John's manage a surprisingly robust 4.6% gain in comps for September? It's an even more impressive feat when one considers that the uptick is stacked atop a 3.4% gain in 2005 and a much smaller 1.2% boost in 2004.
If anything, there's a lesson for me here. We're a Papa John's family. Pizza Hut novelties will snag us every once in a while, but we were pretty loyal Domino's customers until Papa John's arrived a few years ago. However, ever since Domino's introduced its Fudgems in late August, we've been smitten.
What did I have for dinner last night? Does "Two for Tuesday" at Domino's ring a bell?
This is where I have to eat some humble pizza pie. I made the false assumption that most of the country was following me over to Domino's. Papa John's latest promotion for its Sicilian meats pizza rolled out around the time that the Fudgems were introduced this summer, and it just didn't tempt me.
Naturally, I may want to wait until I dig into next week's quarterly earnings report from Domino's before I admit complete defeat. If anything, we may be talking about an entire sector on the upswing.
Through the first nine months of the year, Papa John's has seen its comps climb by a healthy 4.4%. The same can't be said for Domino's, where domestic same-unit sales have dipped in both the first and second quarters of 2006. However, now that Domino's has followed Papa John's into widening its availability of online ordering -- and my slim hope that I'm not the only one obsessing over the Fudgems -- I'm guardedly optimistic that we will be getting a good report out of Domino's next week.
Analysts expect Domino's to earn $0.35 a share for its September quarter. That would be an improvement over the $0.30 per share that the pizza delivery chain reported a year ago. However, even with the recent lackluster comps, Domino's has handily beaten Wall Street's profit targets for six consecutive quarters. If a Domino's that isn't on top of its game has beaten the market, I can only imagine the kind of trouncing that may be possible when it reports a week from Thursday.
If not, I guess that'll hammer my lesson home even harder. Don't worry, Papa John's. I haven't forgotten you, even if apparently you seem to be doing just fine without me.
For more words on America's favorite pies:
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Longtime Fool contributor Rick Munarriz also enjoys pizza from many of the mom-and-pop pizzerias around town. He does not own shares in any company mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
