LONDON -- PizzaExpress PLC (U.SCG) announced that comparable-store sales in its first quarter '03, which ended Sept. 30, dropped 4.4 percent.
According to Dow Jones Newswires, analysts don't expect the company's performance to recover in the near term.
Pizza Express, which operates more than 300 pizza and pasta restaurants across the U.K., blamed sharp declines in London tourism since the fall of 2001 for its sluggish sales.
Numis Securities' Andrew Saunders said London's tourist trade isn't the only cause for PizzaExpress' woes. He said the company hasn't reacted to tougher competition in the region, such as the Ask Central pizza chain, and it has been slow to refurbish sites within the city.
Ask Central also owns the Zizzi pizza chain, and reported a 23 percent profit increase for the first half of 2002.
Saunders said the company's stores outside London, which primarily serve U.K. residents, have fared better, but that the London stores' sales have a broader impact on PizzaExpress' overall sales. Though they account for nearly one-third of the company's total restaurants, they reap half its profits.
Investors shouldn't expect to see sales improvements any time soon, Saunders warned, but once PizzaExpress completes London store upgrades within the next year to year and a half, sales may pick up.
In trading on the FTSE on Oct. 9, PizzaExpress shares dropped 6.6 percent.