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“My decisions are made strictly as an outside investor,” Schnatter, who has given up the roles of chairman and CEO, told FOX Business in an exclusive interview. “And in this case, it's really simple. Arithmetic is not an opinion.”
On Nov. 1, Schnatter sold 1.9 million shares worth about $107.5 million, according to a Securities and Exchange Commission filing this week. He still owns 2.9 million shares, valued at more than $166 million, or roughly 9.2 percent of the company.
|PZZA||PAPA JOHN'S INTERNATIONAL||101.41||+3.96||+4.07%|
No investor wants to own 2 million shares of a company that is going backward, Schnatter says. Papa John’s shares are down 3.6 percent since Schnatter departed as CEO in December 2017, and they had sunk as much as 34 percent before rallying.
Schnatter says the company has struggled following his departure because it “abandoned its fundamental principles" of transparency, integrity, mutual respect and quality.
The thing that concerns him the most is the financial health of the store managers and franchisees, whom he says are hurting because “unit economics are not good.”
Papa John's posted a loss of 10 cents per diluted share in the third quarter, missing the 3-cent loss analysts surveyed by Refinitiv were expecting. Alongside its results, out Wednesday, the pizza chain announced the departure of CFO Joe Smith and other executives. Smith had been at the company for almost 20 years.
Schnatter called the decision to replace a large swath of the executive team a knee-jerk reaction, and said management was "reacting" and "not being proactive."
Schnatter says he has no plans to take the company over at its current price of more than $50 a share, adding that it’s “potentially a $15 stock.”
“There is no reason to be in the car when the car crashes, even if you love the car,” Schnatter said.