CPK Hits Target, Reports 6.9% Gain

California Pizza Kitchen Inc. saw a 6.9% increase in first-quarter earnings, to about $4 million, or 21 cents a share, the Los Angeles-based upscale pizza chain said Tuesday.

But the company, which owns, licenses or franchises more than 153 restaurants, cautioned that it will lower its earnings estimate for the year by about 4 cents a share, citing the slack economy, weather and sagging consumer confidence.

In January, California Pizza Kitchen gave a 2003 earnings range of $1.03 to $1.06 a share. After the market closed Tuesday, the company gave a new range of 98 cents to $1.02. That range assumes that sales at restaurants open at least one year will grow by no more than 1.5% in the second quarter, and by as much as 2% in the second half of the year.

For the first quarter ended March 30, sales at restaurants open at least one year rose by 2.7%. That, coupled with a 17% increase in store count, led to the first-quarter increase in profit and helped boost revenue by 18%, to $82.9 million.

Analysts correctly predicted profit of 21 cents a share for the first quarter. But the second-quarter guidance of 21 cents to 23 cents fell shy of the 27-cent estimate.

“The guidance was lower than many people had hoped for,” said Stephen Spence, who tracks the company for St. Louis-based Kenny Securities, noting that earnings for the year of 99 cents would be only a 10% increase from last year. “This left people feeling a little bit let down.”

Shares fell 35 cents to $23.87 on Nasdaq.

The company does not think it can make up the shortfalls year to date, including higher-than-expected labor costs, this year, Chief Financial Officer Gregory S. Levin said. President and Chief Executive Fred Hipp said slack demand has resulted in overstaffing at some of the newer restaurants, which the company plans to address with scheduling changes.

Hipp said the company is on track to open at least 22 restaurants this year.

It also paid $2 million for a 25% stake in L.A. Food Show, a new bar and grill concept being launched by the company’s founders.