California Pizza Posts 18% Increase in Earnings

Menu improvements and increased sales helped California Pizza Kitchen Inc. post an 18% jump in second-quarter profit Thursday.

The Los Angeles-based chain of 168 premium pizza restaurants earned $5.2 million, or 27 cents a share, compared with $4.4 million, or 23 cents, a year earlier. The results beat forecasts of 25 cents a share.

Revenue climbed 17% to $102.5 million. Sales at restaurants open at least a year rose 6.6%.

The company raised its full-year profit forecast from a range of 98 cents to $1.02 a share to a range of $1 to $1.02. The firm said it would open or acquire seven to nine restaurants during 2004 -- including a prototype in Irvine -- down from a previous estimate of 10 restaurants. Plans call for eight to 10 restaurants to open in the first half of 2005.

California Pizza Kitchen revamped its management a year ago to fix what CPK co-founder Rick Rosenfield has described as a flawed strategy. As part of the shake-up, Rosenfield and co-founder Larry Flax returned to run the company after several years away from the business.

The strategy resulted in the opening in 2002 and 2003 of restaurants in thinly populated areas. The underperforming units caused the company’s first quarterly loss in the third quarter of 2003 and have continued to be a drag on earnings.

Dennis Forst, an analyst with KeyBanc Capital Markets, said future restaurant openings and remodelings should shed light on the company’s ability to reverse its fortunes.

“That’s when you start to see whether we’re legitimately in a turnaround or not,” Forst said.

The earnings were released after the close of regular Nasdaq trading, during which California Pizza Kitchen shares fell 13 cents to $21.27. After hours, they fell further, to as low as $20.40.