Hard times bite into Pizza Express

LONDON'S mid-market restaurants are continuing to suffer hard times, with Pizza Express issuing a profits warning that rattled investors and left analysts to rejig their forecasts again. Shares in the chain fell from 613 1/2p to 520p after it revealed sales had deteriorated in the past three months.

Pizza Express blamed tough trading in London and slower growth outside the capital. It said like-for-like sales in its restaurants across Britain and Ireland were up 1.5% in the three months to 31 March but had since fallen. It now expected sales for the six months to 30 June to be 1% lower than last year. The firm also said its tax charge would also be about £700,000 higher than in 2001 due to changes in the laws regarding share option schemes.

The restaurants group has been hit hard by the tourism slump following 11 September and heavy job losses in the City, particularly among the more averagely-paid workers who frequent its outlets. These events have taken a harsh toll on its bigger restaurants in the capital, triggering a collapse in its share price from 926p at the start of the year. However, there is still speculation it is about to make a return of about 175p a share through a buyback.

Pizza Express sought to bolster its London presence earlier this year by paying £1.95m for Kettners in Soho, which counts Oscar Wilde and Edward VII among its former customers.

A dream and a disappointment