Papa John's drops after report alleges chairman used racial slur

Shares of Papa John's International Inc <PZZA.O> pizza chain down 3.5 pct to a more-than-two-year low on Wednesday a report that Chairman, founder and former CEO John Schnatter used a racial slur on a conference call

Forbes reported that Schnatter used the offensive term for black people on a call with a marketing agency aimed at preventing future public-relations crises

According to the report, Schnatter complained that in the past, "Colonel Sanders" used the racist term without facing a public backlash

RELATED: Check out the 13 chains taking over the U.S.:

Schnatter stepped down as CEO of PZZA in January after he came under fire for blaming soft pizza sales on the National Football League's handling of national anthem protests by players

In a statement, PZZA said: "Papa John's condemns racism and any insensitive language, no matter the situation or setting. ... We take great pride in the diversity of the Papa John's family, though diversity and inclusion is an area we will continue to strive to do better."

PZZA is a favorite among short sellers, with more than 22 pct of the free float sold short, according to S3 Partners data

Stock is now at its lowest since Feb 2016 and is off 45 pct from record high close in Dec 2016; YTD shrs down 12.8 pct vs 3.9 pct gain for the S&P 500 <.SPX>