Papa Murphy’s posts $5.4M loss in Q1

A collision of fewer sales, severance payments and a national television ad campaign have led Papa Murphy’s to a $5.4 million loss for the first quarter of fiscal year 2017.

Revenues, when compared with last year’s fiscal first quarter, fell 3 percent to $32 million for the quarter, but the dip was compounded by a 30-percent rise in expenses, particularly in a segment for selling, general and administrative expenses.

Total expenses rose $9.3 million to $39.9 million for the quarter, pushing the company’s first-quarter profits into the red. Tax provisions absorbed some of those expenses, though, according to the filings.

A lot of the expenses can be traced to television commercials the company bought to target busy moms. Called “Murphy’s Law,” the six-week campaign aired to national audiences to showcase Papa Murphy’s pizza as a reliable dinner option. Papa Murphy’s spent $8.3 million on the commercials.

Chairwoman and interim CEO Jean Birch called the campaign “disappointing,” but she said the misstep reinforced the company’s strategy to focus on regional marketing, working on its products and improving customer convenience.

Recent departures and firings of executives also added to the expense. Papa Murphy’s parted ways with CEO Ken Calwell in December, and he is expected to earn a base salary for another 12 months. The company also eliminated 11 management positions, including two board members.

Birch said the company expects to begin moving in the right direction.

“We believe we now have the right people focused on the right things to return this business to sustained growth and profitability, creating long-term value for all of our stakeholders,” she said.

Share prices for Papa Murphy’s Holdings Inc., traded on the Nasdaq Exchange as FRSH, closed at $4.99 per share Wednesday, up 7 cents.