Papa John's International's Q2 earnings fell 8% year-over-year to US$12.1M despite 5% rise in revenue to US$293.5M; competition, high costs of cheese, other commodities blamed

Cindy Allen

LOUISVILLE, Kentucky , August 3, 2011 (Associated Press) – Pizza chain Papa John's International Inc. said Tuesday that its second quarter net income fell 8 percent because of tough competition and the high cost of cheese and other commodities, even though revenue rose.

Net income fell to $12.1 million, or 47 cents per share, from $13.2 million, or 49 cents per share last year. That matched analyst expectations, according to FactSet.

Revenue rose 5 percent to $293.5 million from $280.6 million last year. Analysts expected higher revenue of $301.7 million.

Restaurants are dealing with high food costs. Papa John's said it expects the competitive environment and high commodity costs, particularly cheese, to continue throughout the rest of the year.

Revenue from restaurants open at least one year rose 0.4 percent, including a 2.1 percent increase at North American company-owned restaurants. The figure edged down 0.1 percent at North American franchised restaurants.

The measure, considered a key gauge of a restaurant chain's health because it excludes revenue from restaurants that open or close during the year, rose 4.8 percent at international restaurants.

The company reiterated 2011 guidance for earnings of $2.02 to $2.12 for the year. Analysts expect $2.11 per share.

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