Papa John's earnings forecast slips on public spat with founder

By Alana Wise

NEW YORK (Reuters) - Papa John's International Inc on Tuesday posted a second-quarter comparable sales decline of 6.1 percent in North America and estimated a further 7 to 10 percent drop in the current quarter as the pizza chain's spat with its founder hurts profits.

Negative publicity depressed July sales in North America, the company said in a statement, noting that it was hard to predict how long and how badly that would affect sales.

Founder and former brand ambassador John Schnatter was ousted as board chairman last month following reports that he had used a racial slur on a media training conference call.

Shares of Papa John's closed down nearly 3 percent, extending a 27 percent year-to-date decline. The stock has lost 48.2 percent of its value over the last 12 months.

The company said it now expected to earn $1.30 to $1.80 per share, down from its previous estimate of $2.40 to $2.60.

Schnatter's image has been removed from Papa John's promotional material and the company launched a third-party audit into the brand's culture. In its Tuesday quarterly filing, Papa John's estimated the costs of these measures at $30 million to $50 million for the rest of the year.

(Reporting by Alana Wise; editing by Jonathan Oatis and Richard Chang)