Celebrity News: What happened
The boost kept shares of the pizza delivery specialist in positive territory for the year, although the chain is lower by 16% in the past 52 weeks compared to a 10% increase in the broader market.
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Celebrity News: So what
March’s rally wasn’t sparked by improving operating trends. In fact, the chain reported in late February that sales fell by a painful 8% in its U.S. locations compared to a 6% increase at rival Domino’s (NYSE:DPZ).
Yet investors grew more optimistic about Papa John’s future anyway following news that its founder and largest shareholder, John Schnatter, has withdrawn his lawsuit against the company. Combined with the announcement that celebrity Shaquille O’Neal is joining the brand, Papa John’s prospects brightened last month.
Celebrity News: Now what
Shaq is part of an influx of new board members that also include the CEO of Starboard Value, an activist investor who has recently poured over $200 million into Papa John’s business. These moves put the pizza giant in position to make the type of aggressive changes needed to end its market share slide against Domino’s and other chains. But the stock’s rally won’t hold up unless faster sales growth occurs over the next few quarters.
Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.