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CPK to combat earnings slump with secret retail items
June 20, 2010
California Pizza Kitchen Inc. has announced updated earnings guidance for the second quarter ending July 4, 2010.
During its May 6, 2010, conference call, the company forecasted second quarter comparable full service restaurant sales in the range of negative .5 percent to negative 2.5 percent and earnings of $0.24 to $0.26 per diluted share. Based upon interim results, management is now forecasting comparable fullservice restaurant sales of negative 6 percent to negative 7 percent for the second quarter and earnings of $0.10 to $0.15 per diluted share. Actual April and May comparable restaurant sales were negative 2.7 percent and negative 7.9 percent, respectively. The company expects to provide additional details in its second quarter sales pre-announcement on July 14, 2010, and later in its August 5, 2010, earnings release and conference call.
"We attribute this softer top-line primarily to timing as we lap our successful 2009 Thank You Card Program," said Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, in a company statement. "The combination of a volatile economy in 2009 and running the program for two consecutive years in 2008 and 2009 limited our visibility into the program's impact. However, given the traction of the 2009 program, we will reintroduce it with additional exciting prizes that are expected to drive traffic in the third quarter."
The company leaders also foreshadow new retail offerings outside of their Cadbury-owned frozen pizza line. "Additionally, we are excited to announce that in August we will launch two to three new licensed products outside the frozen category. This is in line with our strategy of expanding our branded products and prioritizing our commitment to this higher margin channel as we continue to leverage the brand."
Rosenfield and Flax said that despite the Thank You Card Program timing shift, their second quarter operational momentum remains very strong. "Our sales initiatives including our call center, expanded wine selections, catering program and Small Cravings menu are achieving excellent results, and our overall guest satisfaction scores are at record highs. We also rolled out our new menu last week with many items exceeding their individual sales expectations. We are committed to maximizing long-term value for our shareholders and driving the brand through innovation and strategies, both inside and outside the restaurants' four walls."
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