LOUISVILLE - Papa John's International Inc. (NASDAQ:PZZA) reported first-quarter earnings that surpassed analyst expectations, although the company's revenue fell short of estimates.
The pizza chain announced an adjusted EPS of $0.67, which was $0.10 higher than the consensus estimate of $0.57. However, the company's revenue for the quarter was $513.91 million, missing the analyst projection of $544.47 million.
The company's North America comparable sales were down 2% from the previous year, with a 3% decline in Domestic Company-owned restaurants and a 2% decrease in North America franchised restaurants. International comparable sales also saw a 3% drop from the prior year period.
Despite these challenges, Papa John's achieved 8 net unit openings in the first quarter, predominantly driven by growth in North America. The company remains on track to achieve a more than 20% increase in North America net unit growth relative to 2023 and anticipates opening between 100 and 140 new international restaurants.
Total global system-wide restaurant sales reached $1.23 billion, marking a 1% decrease compared to the prior year's first quarter. This decline was attributed entirely to the 53rd week in 2023, which shifted the week between Christmas and New Year's into the fourth quarter.
Total revenues were down 2% compared to a year ago, primarily due to lower revenues in the North America commissary segment as a result of commodity price declines. Operating income saw an 11% decrease to $34 million compared with the first quarter of 2023, while adjusted operating income of $43 million increased by 10%, benefiting from improved restaurant-level margins and continued cost discipline.
Interim CEO and CFO Ravi Thanawala commented on the results, stating, "Our teams are taking a disciplined approach to running the business, improving restaurant-level margins and increasing operating profits despite a challenging environment in the first quarter."
Thanawala highlighted the company's focus on initiatives aimed at driving sustainable, profitable growth globally and expressed confidence in the long-term success of their consumer-centric approach and efforts to enhance franchisee profitability.
Following the earnings release, Papa John's stock experienced a slight decline of 0.4%, indicating a muted market response to the revenue miss. The company's performance in the first quarter reflects the ongoing efforts to navigate a challenging market environment while laying the groundwork for future growth through strategic initiatives.
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