Why Pizza King, Inc. is losing billions as its pizza business goes under
Posted On July 29, 2021
By David WeigelAssociated PressNEW YORK (AP) Pizza King Inc. lost $1.2 billion in the first quarter, with revenue slipping from a record $1 billion in Q1 2015.
The company’s stock closed down 3.7% to $1,966.62 in trading Tuesday.
Pizza King’s shares have gained more than 50% this year, but the company’s share price has fallen by almost 40% since the beginning of the year.
It’s unclear how much the decline is related to a slowdown in China, where it has been building factories and building a new U.S. factory, as well as from lower demand in the U.K., France and elsewhere.
It was the company only loss in the second quarter, which included the first half of last year, said Jason Dolan, an analyst at J.P. Morgan Securities LLC in New York.
The company also lost $543 million in the third quarter of 2016.
In its most recent quarterly financial report, Pizza King said it has “a solid track record of sustaining its cash flow and increasing profitability.”
The company reported a $8.9 billion operating loss in Q2.
The same report said the company lost $921 million in 2016.CEO Scott McNealy said in a conference call with analysts that the company was able to turn around its financial position by diversifying revenue sources and by focusing on growing its pizza operations.
The business has had more than 4,500 restaurants in the United States since it began operations in 2008.
The decline was expected.
The pizza-making company said it was unable to expand its U.H.S., California and Florida plants, which make up 80% of its total revenue, and has “limited capacity” in the Middle East, the company said in its latest financial filing.
It also said it plans to spend more than $500 million in capital expenditures over the next two years to expand and improve operations in the business.
“We are on the path to profitability and we are on a path to delivering growth,” McNealie said.
The growth was expected to continue, with the company expected to see revenue growth of 9% in 2021.
The stock has fallen more than 30% since McNeali took over in the fall of 2016 and its shares have fallen more as a share of company value than as a percentage of the company.
The CEO has been in charge of Pizza King for more than three years.
It is expected that he will be named chief executive at the end of this year.
The move was not announced during his address.
“I’m not looking at any exit options.
I’m not thinking about any,” McNealing said.
He did not answer questions about the company or its future.