Papa John’s stock performance
On July 11, Forbes reported that John H. Schnatter, Papa John’s (PZZA) chairman, used the N-word during a conference call in May. Schnatter confirmed the incident and apologized. The article caused Papa John’s share price to fall 4.8% on July 11.
Late in the day, Papa John’s issued a statement that Schnatter resigned. The board will appoint a new chairman in the coming week. Investors reacted positively to the news. The company’s share price rose to a high of $55.83 on July 12 before closing the day at $53.67—a rise of 11.1% from the previous day’s closing price. In November 2017, Schnatter faced criticism for blaming the NFL and its leadership for Papa John’s weak sales. As a result, he stepped down as the company’s CEO.
TheStreet.com reported that Will Slabaugh of Stephens said in a note that “Schnatter’s exit appears to be well received by the market, taking into account the notable drag on sales following the November incident … We believe this helps to stem what had likely become an elevated risk of losing various partnerships/sponsorships, though conclusions are difficult to draw at this point.”
Despite the recent rise in Papa John’s stock price, it’s still trading 4.3% lower compared to the company’s stock price at the beginning of 2018. Domino’s Pizza (DPZ) and Yum! Brands (YUM) have returned 47.7% and -3.1% YTD (year-to-date), respectively. The S&P 500 Index (SPY) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 4.4% and 13.5%, respectively.