LONDON -- After Pizza Express warned on June 24 that comparable store sales for the second half of 2002 likely will decline 1 percent, the stock's value dropped 16.3 percent. Shares closed trading at 513 pence each (about U.S. $7.72).

The drop in store sales is the company's first since it went public in 1993.

Multiple news reports cited Pizza Express chief executive David Page's claim that the ongoing international economic slump has claimed the jobs of many media and financial workers who are among the company's key target customers.

Additionally, the BBC reported that supermarket sales of Pizza Express' frozen pizza -- though three times greater than expected -- also are draining restaurant sales. Supermarket exit poles revealed that more than 20 percent of the frozen pizza buyers say they otherwise would have bought the same pizza at a Pizza Express store.

According to Reuters, some analysts fear Pizza Express is facing other problems, such as market saturation, tough competition and the need to update its menu. Since last September's terrorist attacks on the U.S. sent London's tourist industry into a tailspin, stores based in the city have struggled, while the company's suburban stores have fared positively.

Page did announce that Pizza Express is completing new marketing deals with other major food retailers and rolling out new pizzas, such as the Parmense (topped with Parma ham and asparagus).

Page did not rule out widely reported speculation that the company will return as much as £120 million (U.S. $180 million) to shareholders through either a share buyback or special dividend. A decision either way, he added, won't be made soon.

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