Fewer pizza sales and a rise in expenses nearly delivered Papa Murphy’s a $20 million loss for 2017, but it was offset by a sizeable tax benefit, according to a Wednesday filing with the U.S. Securities and Exchange Commission.
Sales dropped at Papa Murphy’s locations by 4 percent last year and expenses heated up as the company closed 54 stores, paid severance packages and moved to a new e-commerce platform.
After interest, and before taxes, Papa Murphy’s was facing a $19.55 million loss.
But the company’s bottom line was saved by a nearly identical amount in tax benefits, including $12.6 million attributed to the passage of the U.S. Tax Cuts and Job Act in December. That and other tax benefits lowered the company’s annual loss to $7,000.
The tax benefit arrived during the company’s fiscal fourth quarter, helping lift its latest quarterly income from $1.5 million to $13.5 million year over year.
Papa Murphy’s Holdings Inc., traded on the Nasdaq Exchange as FRSH, closed trading Wednesday at $5.35 per share, up 15 cents.
The company reported the figures in its annual report to investors as well as a filing with the U.S. Securities and Exchange Commission on Wednesday.
CEO Weldon Spangler was optimistic about the future, headlined by moves to make Papa Murphy’s more convenient — and more attractive to younger customers.
The company has added delivery to more than 300 locations and expects to have its new e-commerce platform, Olo.com, ready to go by the end of the week. A rewards program to incentivize digital ordering is in the works, too.
A subtle rebranding could be in the works. Papa Murphy’s hired a new chief marketing officer in February and plans to spend more of its marketing budget on digital marketing, helping put the delivery and online ordering in front of younger buyers, Spangler said.
“While people have told us that Papa Murphy’s is hands-down their favorite pizza, we’re missing out on many of their pizza occasions because sometimes convenience trumps quality,” he said.
“That’s highly disappointing to us, and we’re working fast to eliminate the need for customers to compromise by making it easier for them to order online and to have our great product delivered.”
Still, Papa Murphy’s hopes to cut down its expenses. The company owns 145 stores and is trying to get that below 60 by the end of the year.