Papa John’s is spending a lot of dough on its image.
The embattled pizza chain expects to shell out up to $50 million this year to pay an army of advisers and consultants to deal with the aftermath of its controversial founder’s remarks on racial issues, the company said on an earnings call Tuesday.
The Louisville, Ky.-based company’s sales took a huge hit, declining 10.5 percent in July and 6.1 percent for the quarter ended July 1 as Chairman John Schnatter stepped down following an investigative report.
“We are working to ensure that our future is not defined by the words of one person,” CEO Steve Ritchie said on the call.
The company also revised its estimates and now expects comparable sales in North America to decline between 7 and 10 percent this year “because of the negative media coverage and customer sentiment,” said CFO Joe Smith.
Schnatter issued his own assessment of the quarter. “The company is trying to deflect attention from the source of the problem — management’s ongoing failures with regard to financial performance — and blame me for its problems.”
Shares declined by as much as 12 percent in after-hours trading Tuesday.
Source: Read Full Article