On Wednesday, July 8, California Pizza Kitchen (CPKI) raised its second-quarter earnings guidance, helped by cost-control initiatives that offset declining revenue. Shares of the company climbed 4.49% and closed at $13.73 after the announcement.
California Pizza Kitchen now expects second-quarter earnings in the range of $0.24 to $0.25 per share, up from its previous forecast of $0.18 to $0.20 per share. The company’s strong average weekly sales across newly opened restaurants prompted management to boost its earnings forecast. The company’s Thank You Card Program was also successful in driving sales.
Separately, California Pizza Kitchen reported preliminary results for the second quarter of 2009. Revenue for the quarter fell 3.2% to $170.9 million from $176.6 million in the prior-year quarter. Comparable-restaurant sales at its full-service restaurants open at least 18 months fell 6.5% for the second quarter, compared with an increase of 1.5% reported in the year-ago period. The company had earlier forecast comparable-restaurant sales falling in the range of 5.5% to 6.5%.
California Pizza Kitchen also lowered its outstanding debt by $17 million in the quarter, leaving a balance of $50 million at the end of the quarter.
During the quarter ended June 28, California Pizza Kitchen opened full-service restaurants in Norcross, Georgia and Sacramento and Valencia, California. The company’s franchise partner also opened a full-service restaurant in Guadalajara, Mexico.
California Pizza Kitchen owns and operates a chain of 255 restaurants (as of July 8, 2009), of which 208 are company-owned and 47 operate under franchise or license agreements. The average guest check is $14.30.
Like California Pizza Kitchen, other casual dining operators — Cosi (COSI), Ruby Tuesday (RT), Red Robin Gourmet Burgers (RRGB), Famous Dave’s of America (DAVE), O’Charley’s (CHUX), Brinker International (EAT) and Cheesecake Factory (CAKE) — are also facing the brunt of the recession with slumping same-store sales and declining traffic. The consumers with lower disposable income are either shifting to quick-service restaurants because of their lower priced menu or are dining at home.
We maintain a Sell rating on California Pizza Kitchen with a six-month target price of $12. The company expects to release its second-quarter earnings on August 6, 2009.
Read the full analyst report on “CPKI”
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Read the full analyst report on “RT”
Read the full analyst report on “DAVE”
Read the full analyst report on “EAT”
Read the full analyst report on “CAKE”
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