Charges, lawsuit weigh on California Pizza results
November 12, 2010
by Eric Schroeder
LOS ANGELES — California Pizza Kitchen (CPK) suffered a loss of $7,538,000 in the third quarter ended Oct. 3, bogged down by the effects of a non-cash impairment write-down of 10 full-service restaurants, the proposed settlement of a class-action lawsuit, and store closing costs. The loss compared with net income of $5,791,000, equal to 24c per share on the common stock, in the same period of fiscal 2009. Excluding the charges, CPK said net income in the most recent quarter would have been $5,689,000.
Net sales in the third quarter were narrowly lower, falling to $164,543,000 from $164,839,000.
Despite the charges and legal settlement, the company’s top executives were upbeat about the quarter.
“With our successfully executed Thank You Card Program, full-service comparable restaurant sales were positive for the first time in more than two years,” said Rick Rosenfield and Larry Flax, co-chief executive officers. “We also managed our labor, direct operating and occupancy costs, which allowed us to drive non-GAAP net income compared to the prior year quarter.”
Mr. Rosenfield and Mr. Flax said CPK plans to drive traffic and comparable sales through menu innovation and a stepped-up dining experience for its guests.
“We are implementing strategies to further control expenses and identifying leverage opportunities to strengthen our full-service platform,” they said. “This in turn will drive growth in the key ancillary channels of franchise expansion and branded grocery products. We are focused on enhancing our brand equity and maximizing shareholder value by improving our free cash flow and return on invested capital both inside and outside the restaurants’ four walls.”
CPK sustained a loss of $846,000 in the nine months ended Oct. 3, which compared with income of $14,481,000, or 60c per share, in the same period a year ago. Net sales were $484,288,000, down 3% from $496,839,000.