Louisville / KY. (pj) Papa John’s International Inc., one of the world’s largest pizza delivery companies, provided an update on the business impact of the global coronavirus (Covid-19) pandemic, including preliminary first quarter 2020 comparable sales information. The company currently anticipates announcing its first quarter earnings in early May.
Rob Lynch, President + CEO said, «As we all work together to manage through the Covid-19 pandemic, I am incredibly proud of the tireless work of Papa John’s team members and franchisees, who are stepping up to serve our communities in these unprecedented times. From delivering meals to healthcare workers, first responders and families, to supporting blood drives and the organizations on the frontlines of this crisis, the Papa John’s family has already served tens of thousands of meals to our neighbors in need. These acts remind me every day that it’s both our privilege and duty during this time to keep our doors open and help feed our neighbors.
«Our team members’ health and safety is always our top priority, and even more so now because of the critical importance of their work. We have implemented extra health and safety measures across our business, including No Contact Delivery, for the protection of both our customers and team members. We have expanded our benefits to include free virtual doctor visits. This is in addition to existing benefits of no-cost mental health support, affordable health plan options and access to the Papa John’s Team Member Emergency Relief Fund, if and when needed. We have also ramped up our hiring to provide thousands of jobs to workers displaced by the impact of Covid-19.»
Lynch concluded, «First in Asia, then in Europe, and now in North and South America, we have seen the Covid-19 pandemic impact our business differently, depending on the restrictions enacted by governments. In some international markets this has resulted in temporary closures, but in most markets, including North America, we are nearly fully operational. Although March sales in North America were negatively impacted by the cancellation of large gatherings, including major sporting events, our international and domestic businesses have performed well, as customers and communities rely on us and others in the food delivery industry. Our cash position is supporting our current operations, and we have access to approximately $350 million in our credit facility, should we need it. We are continuously monitoring the situation and will provide further updates on our upcoming first quarter earnings call.»
Preliminary Estimated First Quarter 2020 Comparable Sales
Preliminary, estimated comparable sales information for the three fiscal periods during the three months ended March 29, 2020 (Periods 1, 2 and 3), and for the fiscal quarter ended March 29, 2020, compared to the same periods in the prior year are as follows:
Preliminary results | Period 1 | Period 2 | Period 3 | Q1/2020 | ||||
2019-12-30 to 2020-01-26 | 2020-01-27 to 2020-02-23 | 2020-02-24 to 2020-03-29 | Three months ended 2020-03-29 | |||||
Comparable sales growth / (decline) (a) | ||||||||
Domestic company-owned restaurants | 9.4% | 7.6% | 2.5% | 6.1% | ||||
North America franchised restaurants | 7.1% | 4.7% | 4.0% | 5.1% | ||||
System-wide North America restaurants | 7.6% | 5.4% | 3.6% | 5.3% | ||||
System-wide international restaurants | 4.9% | 2.9% | (0.6%) | 2.3% |
.
(a) Represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. Comparable sales results for restaurants operating outside of the United States are reported on a constant-dollar basis, which excludes the impact of foreign currency translation.
The Company believes North America and international comparable sales growth information, as defined in the table above, is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Franchise sales also generate commissary revenue in the United States and in certain international markets. Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the company’s revenues.
Update on Impact of Covid-19 on International Markets
Of the company’s approximately 2,100 international franchised stores, approximately 350 are temporarily closed, principally in Ireland, Peru and the Philippines, where all stores have closed due to government policies. In China and Korea, which were impacted early by Covid-19 and where new infections have significantly declined, 15 of the company’s franchise locations in China and one of the locations in Korea remain closed.
Company Withdrawals Fiscal 2020 Outlook
While the company’s business is currently performing well, there are many uncertainties related to the Covid-19 pandemic which cannot be predicted. For this reason and out of an abundance of caution, the company is withdrawing its previously provided financial outlook for fiscal 2020.
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