CPK Swings to Profit on Stronger Sales

California Pizza Kitchen Inc. said Thursday that stronger sales -- driven in part by new menu offerings -- helped the restaurant chain post a third-quarter profit, reversing a year-earlier loss.

The Westchester-based chain of 170 premium pizza outlets earned $2.3 million, or 12 cents a share, contrasted with a loss of $4.8 million, or 26 cents, a year earlier.

Excluding charges, the company would have earned $5.2 million, or 27 cents a share. The charges included $2.7 million for three store closures, $1.3 million to settle an employee lawsuit and $1.1 million for accelerated depreciation due to store remodeling.

On that basis, analysts had forecast a per-share profit of 25 cents for the third quarter, according to Thomson First Call. The company released its results after the stock market closed. CPK shares fell 25 cents to $23.75 during the day on Nasdaq but climbed 75 cents to $24.50 in after-hours trading.

Revenue grew 14% to $106 million. Sales at stores open at least a year rose 7.5%. CPK officials attributed the improvement in part to new menu items, including chicken and shrimp lettuce wraps and a Waldorf chicken salad.

“These items have had a great quarter and ... a very solid word of mouth,” co-Chief Executive Rick Rosenfield said.

Excluding 121 store-closure days caused by remodels and the Florida hurricanes, sales at stores open at least a year would have grown by 8.7% in the third quarter, they said.

The company said it expected per-share earnings of 30 cents in the fourth quarter and $1.11 to $1.13 for 2005.

CPK officials have been trying to improve performance at a group of struggling stores that have been a drag on profit. The closure of three outlets probably will help the company’s margins and cash flow, said Stephen Spence, an analyst with Longbow Research.

But Spence questioned whether the expense associated with a plan to remodel additional stores would generate an adequate return on investment.

“The days the restaurants are closed [for remodeling] are very, very expensive for them,” Spence said.