Founder cites his absence in Papa John’s sag

John Schnatter thinks he’s the solution to Papa John’s International’s sales slump. The company thinks he’s the problem. No matter who’s right, investors aren’t happy.

The pizza chain, where Schnatter resigned as chairman last month after using a racial slur, reported comparable sales in North America that fell 6.1 percent in the latest quarter, worse than analysts had predicted. While the company continues to distance itself from its outspoken founder and largest shareholder, Schnatter blames the results on the fact that he’s no longer in charge.

“History shows that the company performs better with me involved, and it declines when I step away,” Schnatter said in a blistering statement after the release of quarterly results. “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.”

The pizza chain said Schnatter’s behavior is weighing down performance, especially since news broke in mid-July that he’d used the offensive language. North American samestore sales fell 10.5 percent last month, after the latest quarter ended, Papa John’s said in a filing Tuesday. The poor sales prompted the company to cut its profit forecast for the year. It has started removing Schnatter’s image from pizza boxes, and asked him to cease media appearances on behalf of the chain.

“John Schnatter’s comments are an attempt to distract from his own words and actions,” a company spokesman said late Tuesday. “We have received strong support from our stakeholders for the actions underway, including the decision to remove Mr. Schnatter from the brand. We remain focused on the important work underway to move the company forward. We are confident that we can.”

Because of the recent negative publicity, Papa John’s will incur “significant costs” for remodeling, a new ad campaign, a company audit and legal costs, the chain said in its earnings statement. It’s also giving financial assistance to franchisees who’ve been hurt by Schnatter’s statements “to mitigate closings,” it said. It estimated those total costs at between $30 million and $50 million for the remainder of the year.