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CPK Posts Its First Quarterly Red Ink

October 24, 2003|Karen Robinson-Jacobs | Times Staff Writer

California Pizza Kitchen Inc. suffered a $4.8-million third-quarter loss after writing down some underperforming restaurants, the Westchester-based company said Thursday.

The loss, the first quarterly red ink since the company went public in August 2000, amounted to 26 cents a share.

Without the charges, net income would have been 23 cents a share, the company said. On that basis, Wall Street analysts had expected a profit of 22 cents.

Revenue for the quarter ended Sept. 28 rose 18% to $93.1 million.

The results were released after the stock market closed. Shares of CPK gained 40 cents to $19 on Nasdaq. But in after-hours trading, they fell 50 cents.

The earnings slide represented continued fallout from what co-founder Rick Rosenfield referred to in July as a "flawed real estate strategy." Rosenfield said the growth plan backed by former CPK President Frederick Hipp had the company growing too quickly and taking "bad locations" in some shopping malls.

As a result of lower-than-expected sales at 11 restaurants, the firm will take a noncash charge of $13 million. CPK also incurred $820,000 in severance costs related largely to the departure of Hipp, who quit in July.

Rosenfield and Larry Flax, who co-founded the company in 1985, have returned as co-chief executives.

The 11 troubled restaurants posted an average weekly sales volume of $32,250, about 42% below the average sales level of all company-owned stores.

Rosenfield said CPK might close up to five of the lagging outlets, a move that might result in future charges.

As a result of the initiatives, the company lowered its earnings guidance for 2004 to 95 cents to $1 a share, compared with previous estimates of $1.05 to $1.10.

CPK plans to open 10 to 12 restaurants next year, down from 18 in 2002 and 22 this year.

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