Pizza Express showed no immediate sign of a trading revival today as the restaurant group embarks on a project to spice up its outlets.
Last month, the company announced plans to overhaul 80 of its older restaurants after annual profits dipped for the first time in its nine years as a plc.
The need for change was further shown by a first quarter trading update today showing UK like-for-like sales had fallen 4.4% in the 12 weeks to 22 September.
Chief executive David Page warned: “The pattern of trading for Pizza Express has shown no improvement since the last quarter of the 2001 financial year.”
He added that negative like-for-like sales had continued within the M25, where most of the company’s oldest outlets due for refurbishment are situated.
These restaurants are still profitable but sales have failed to match the sales growth seen elsewhere in the country, the Uxbridge-based group said.
Shares, which had been changing hands at 405p on the day before last month’s results announcement, today fell another 18.5p to 262.5p – 6% fall.
The refurbishment programme is expected to take two years to complete and will see Pizza Express spend around £13m on improvements. It has also begun trials of a new menu in 11 of its outlets.
Pizza Express runs 300 restaurants but also sells pizza in Sainsbury’s and Waitrose supermarkets and is piloting a takeaway concept at train stations.
However, the company warned earlier in the year that margins were being affected by the popularity of its cheaper pizzas in Sainsbury’s stores.
That contributed to a fall in pre-tax profits for the year to 30 June to £38m from £40m last time as like-for-like sales edged up only 1%.
Sales were recently extended to Waitrose supermarkets and are running ahead of internal expectations while first quarter like-for-like sales in the 16-strong Café Pasta chain have lifted 8.5% after benefiting from recent refurbishment work.
EGi News 09/10/02
