NEW YORK - Sales growth at Papa John's (PZZA) is slowing, and the pizza chain is blaming it on the outcry surrounding NFL players kneeling during the national anthem and falling NFL ratings.
The company, which is a sponsor and advertiser of the NFL, said customers have a negative view of the chain's association with the NFL. The company also cut its earnings growth expectations for the year and Papa John's stock fell about 10 percent Wednesday.
"NFL leadership has hurt Papa John's shareholders," said the chain's CEO, John Schnatter, in a call with analysts Wednesday. "This should have been nipped in the bud a year and a half ago."
The kneeling movement was started last year by former, who kneeled to protest what he said was police mistreatment of black males. More players began kneeling after President Donald Trump said at an Alabama rally last month that team owners should get rid of players who protest during the anthem.
NFL commissioner Roger Goodell and several owners said at the league's fall meetings last month that they did not discuss altering the anthem policy language from "should stand" to "must stand."
"The NFL was eighth of the top 10 prime time shows. So it's experiencing a significant decline, which is leading us to have to look at other investment to create that consumer preference of our brand," Brandon Rhoten, chief marketing officer with Papa John's, said in the earnings call.
TV ratings for NFL games have fallen sharply this year, a second straight season of disappointing viewership. Experts have offered a range of possible explanations, including the league broadcasting too many games, growing public concerns with brain injuries to player and the anthem dispute.
Schnatter implicitly criticized Goodell's handling of the anthem controversy.
"We're certainly disappointed that NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties this year, year-and-a-half ago," he said in the earnings call.
"Good or bad, leadership starts at the top, and this is an example of poor leadership," he added.
Other companies don't see the NFL as a problem. Executives at chicken wing chain Buffalo Wild Wings (BWLD) said last week that the company didn't expect declining NFL viewership to hurt a key sales figure. And Kohl's (KSS), the department store operator, said it is working with the NFL on a holiday ad campaign.
"What we see is a lot of our shoppers and prospective shoppers are watching NFL so that is what is behind the decision," said Greg Revelle, the chief marketing officer at Kohl's. "We are very confident."
As for Papa John's, it reported late Tuesday that third-quarter sales rose 1 percent at established locations in North America, which it said was below what the company had expected. In the same period a year ago, sales rose 5.5 percent at established locations.
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