Papa John's (PZZA) Reports Q4 Business Update, Sales Rise Y/Y
Papa John's International, Inc. PZZA provided an update on its business for the fourth quarter and financial year 2023. The company stated that the results are preliminary and subject to the completion of normal year-end accounting procedures and adjustments. The company expects to release its fourth-quarter 2023 results on Feb 29, 2024.
Preliminary Sales Update
In the fourth quarter ending Dec 31, 2023, global system-wide sales totaled nearly $1.3 billion, reflecting a 12% increase year over year. Excluding the 53rd week in 2023, sales growth for the quarter came in at 3%.
In the fiscal 2023, global system-wide sales amounted to about $5.0 billion, indicating a 5% increase from 2022 levels. Excluding the additional 53rd week, annual sales growth stood at approximately 3%.
In North America, comparable sales (on a 13-week basis) for the fourth quarter of 2023 rose by 2% year over year. The upside was driven by both transaction and ticket growth at both Domestic Company-owned restaurants and North America franchised restaurants. In 2023, North America comparable sales (on a 52-week basis) were up 1% year over year, courtesy of 3% growth at Domestic Company-owned restaurants.
International comparable sales for the fourth quarter and full year 2023 were down 6% and 4%, respectively, on a year-over-year basis.
Store Developments
In 2023, total net unit openings came in at 210, including 57 net unit openings in North America and 153 net unit openings in international markets. Previously, the company anticipated opening 245-260 net new units in 2023.
The lower-than-expected net unit openings were primarily influenced by various factors, such as unanticipated closures of international restaurants (including 10 U.K. franchised restaurants), re-categorization of 12 international units as closed locations (following an assessment of temporary restaurant closures), rescheduling of restaurant openings for 2024 and delays in opening new restaurants due to the ongoing conflict in the Middle East.
Other Updates
Papa John's International's CEO Lynch remarked on the International segment, highlighting a significant expansion in the past decade and operating in 50 countries and territories.
To propel the next phase of international growth, the management emphasizes restructuring the business to enhance customer and franchisee value, optimize investments and strengthen major markets (like the U.K.) for sustainable growth and brand resilience.
In the U.K., efforts are directed at refining operational efficiency, customer experience and profitability, leading to strategic closures of underperforming franchised restaurants in 2023. The company anticipates further closures in 2024 to strengthen the remaining stores and fortify the franchisee base in the crucial market.
The company also plans to accelerate development in North America. It focuses on technological investments to enhance consumer-facing innovations, marketing and value delivery, aiming to boost market share globally.
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In the past three months, shares of Papa John's have gained 7.9% compared with the industry’s 10.4% growth.
Zacks Rank & Key Picks
Papa John’s currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are:
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The Zacks Consensus Estimate for ARCO’s 2024 sales and earnings per share (EPS) indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
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The Zacks Consensus Estimate for SHAK’s 2024 sales and EPS suggests rises of 15.2% and 38.3%, respectively, from the year-ago period’s levels.
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The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 6.4% and 26.2% growth, respectively, from the year-ago period’s levels.
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