Everyone already knew Papa John's International (PZZA) - Get Papa John's International, Inc. Report had a rough 2018 thanks to the ouster of founder John Schnatter, but the company's fourth-quarter release crystallized just how bad the year was after the pizza maker reported its first annual sales decline in nearly a decade.
The last time Papa John's recorded a decline in annual sales was 2009 as the company last year lost an endorsement deal with the NFL after Schnatter weighed in on the anthem protest controversy and admitted that he used a racially derogatory term during a conference call.
North American comparable-store sales fell 8.1% in the fourth quarter as overall revenue declined 12% in 2018 to $1.57 billion.
The stock was up 5.7% Wednesday despite the sales declines as the company projected an adjusted profit between $1 and $1.20 per share with North American comps expected to fall between 1% and 5%.
Wall Street expects the company to report earnings of $1.14 per share with North American comps expected to decline 1%.
"We still have lots of hard work to deliver sustainable growth in the business," Chief Executive Steve Ritchie said during a conference call. "However, we are making progress and our recent investment agreement with Starboard represents a strong confidence in our company and the opportunities ahead."
The company said that it will make targeted investments in marketing using the $200 million investment Starboard Value made earlier this month.
Overall, the company reported fourth-quarter earnings of 15 cents per share, matching consensus, on revenue of $374 million, which was short of Wall Street's $390.7 million expectations.