Papa John’s Blames NFL for “Polarizing Customer”, Pizza Hut Says NFL Has No Impact on Business

Papa John’s Pizza slashed full-year revenue and profit forecasts and blamed same store sales missing analyst estimates, on the company’s association with the NFL. PZZA CEO John Schnatter believes the political controversy that has engulfed the league this season has had a negative effect on ratings (down 7.5% from ‘16). Schnatter was quoted saying “NFL leadership has hurt Papa John’s shareholders. The controversy is polarizing the customer, polarizing the country.” PZZA shares are down 8% since the announcement. The company has pulled all advertising associated with the NFL.

Howie Long Short: Not all NFL sponsors feel the way Schnatter does. Kohl’s (KSS) is said to be working with the league on a holiday ad campaign, Buffalo Wild Wings (BWLD) recently went on the record stating that they do not anticipate any decline in key sales figures because of their relationship with the NFL and Pizza Hut (YUM) CEO Greg Creed said the company isn’t seeing any impact on their business. PZZA blaming poor sales on the NFL, is like the NFL blaming declining television ratings on hurricane coverage; perhaps it’s had a slight impact, but to place the sole blame there belies the fundamental issues with the business. The stock is down more than 26% this year.

Fan Marino: I always wonder why people in New York and New Jersey order from Domino’s (DPZ), Pizza Hut (YUM) or Pappa John’s (PZZA), when there are so many better local options. In NYC for a few days and not sure where to find the best slice? Barstool founder Dave Portnoy has a “pizza review” series to help you out. Here is a link to an episode he did with Bryce Harper.

Papa John’s Blames the NFL for Hurting Pizza Sales

Editor Note: The summary for this story was co-written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.

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NFL SPONSORS EXPRESS CONCERNS WITH DECLINING RATINGS AND POLITICAL UNREST

Several NFL sponsors have contacted the league’s front office to express their concerns with declining TV ratings and the political unrest that has engulfed the league, for the first 7 weeks of the season. Long-time sponsor Papa John’s (PZZA) has told the league that in-game sales have fallen, since President Trump’s first comments on NFL player protests, back on September 22nd. USAA, another official league sponsor, has confirmed that it too has been in contact with the league office about the issues. Despite 45’s call for the league to suspend players that fail to stand for the national anthem, the NFL has taken the position that it will allow its players to freely express their beliefs as they see fit.

Howie Long-Short: According to a new Harris Poll, PZZA has surpassed Pizza Hut (YUM) as the most popular pizza chain brand; but that popularity isn’t correlating with revenue growth. While YUM is up 17% this year, PZZA is down 21% YTD. Analysts expect PZZA to report Q3 revenues have grown 1.5% (to $428.73 million) YOY; with Pizza Hut (YUM) expected to report 10.5% growth (to $626.42 million) over the same period. Unfortunately for PZZA shareholders, popularity doesn’t guarantee success.

Fan Marino: League sponsors are contractually bound, so there is no immediate threat of revenue loss for the NFL. Any existing concerns are related to a potentially negative financial impact on future negotiations. The current collective bargaining agreement runs through the 2020 season, so the league isn’t going to be able to force players to stand before that. To be clear, there are some billionaire owners who defend the player’s right to protest. 49ers Owner Jed York was quoted as saying “Our country is more important than a slight economic impact.” At least one of these guys has his priorities in line.

NFL concedes that national anthem protests are hurting business

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