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CEC thinks $10 pizza will help raise Q2 2010 47 percent profit decline

August 5, 2010

CEC Entertainment Inc., known to the world as Chuck E. Cheese, has announced its financial results for the second quarter ended July 4, 2010. CEO Michael Magusiak expressed his disappointment at comps and other decreases, and announced the company’s plans to combat with their own $10 pizza deal, which he says have already helped sales.

Second quarter 2010 comparable store sales on a same calendar week basis decreased 2.2 percent. Comparable store sales for the first six months of 2010 on a same calendar week basis decreased 0.5 percent.

“I believe there were a number of factors that accounted for our weak sales performance, including the reduction of discounts in many of our coupon offers, an economic slowdown in June, and very strong box office receipts for kids’ and family movies,” Magusiak said. “Certain coupon strategies have already been modified in July. In addition, on July 17, we began airing a national television commercial featuring a $9.99 summer special large cheese pizza. I believe that the modification of some of these sales strategies in July has contributed to a same week comparable sales increase of 2.1 percent during the first four weeks of the third quarter.”

Net earnings for the second quarter ended July 4, 2010, were $4.8 million compared to net earnings of $9.0 million in the second quarter of 2009, a 47 percent decrease. Net earnings for the first six months of 2010 were $38.6 million compared to net earnings of $43.0 million in the first six months of 2009, a 10 percent decrease. 

Total quarterly revenues decreased 2.1 percent to $181.0 million during the second quarter of 2010 from total quarterly revenues of $184.8 million in the second quarter of 2009. For the first six months of 2010, total revenues decreased 1.3 percent to $427.3 million compared to total revenues of $432.9 million in the first six months of 2009. For the first six months of 2010, total revenues decreased 1.3 percent to $427.3 million compared to total revenues of $432.9 million in the first six months of 2009.

Total reported revenues for the first six months of 2010 were impacted by one additional operating week in the company’s 2009 fiscal year which caused the seasonally strong first week of the 2010 calendar year to shift into the fourth fiscal quarter of 2009 instead of in the first fiscal quarter of 2010.