Papa John’s Pizza shares plunged in trading Wednesday after the Kentucky-based chain posted a sales decline in its first quarterly results since cutting ties with the NFL in February.
Same-store sales in North America fell 5.3% in the company’s first fiscal quarter of 2018. Overall, revenue fell nearly 5% to $427.4 million, while net income dropped 41% to $16.7 million.
The sales plunge occurred in the months after Papa John’s and the NFL mutually agreed to end their longtime sponsorship agreement. The pizza chain’s relationship with the league deteriorated after founder “Papa” John Schnatter publicly blamed weak revenue on the NFL’s “poor leadership” during a wave of player national anthem protests.
"Although first quarter results were lower than the prior year, they were consistent with our expectations,” Papa John’s President and CEO Steve Ritchie said in a statement. “We remain focused on enhancing our value perception and driving our strategic initiatives."
Papa John’s posted declines in North American same-store sales in each of the last two quarters. It faces competition from industry leader Pizza Hut, which replaced it as the NFL’s pizza sponsor, and Domino’s. Both rivals have embraced digital customer outreach, loyalty programs and discounted menu items to seize market share.
Papa John’s shares fell more than 3% in trading Wednesday after the earnings report.
Ritchie said that Papa John’s is experimenting with menu discounts to address customer concerns about the price of its pizza. The company is also overhauling its marketing efforts and investing in digital technology.