Pizza chain Prezzo reports jump in profits

Pizza and pasta restaurant chain Prezzo shrugged off the squeeze on consumer spending today by posting a jump in half-year profits.

The 172-strong chain lifted revenues by almost a quarter to £59.6 million in the six months to July 3, with sales boosted by the opening of seven new outlets, though two others were closed.

Profits rose strongly, outstripping City forecasts, to climb 17% to £7.3 million on an underlying basis. One analyst estimated that sales excluding the impact of new openings rose by 5% in the period.

Prezzo stepped up its expansion plans a year ago after they were put on hold in 2009 during the recession. It today confirmed it is on track to hit its target of 20 openings over the whole of 2011.

Seven new restaurants have already opened since June and Prezzo is refurbishing sites recently acquired from Caffe Uno.

Chairman Michael Carlton said trading had been relatively stable over the year so far, adding that while there is still "considerable uncertainty" over the economy and consumer confidence he expects a "positive outcome for 2011".

Shares in the Essex-based group rose by nearly 7% as analysts said the group is well on track to meet forecasts for the whole of 2011.

Chief executive Jonathan Kaye put the strong performance down to its value-focus, as well as investment in products and online offerings and its move to more prime locations.

Over the past year outlets have opened in city centres in Aberdeen, Cardiff and Glasgow with the northern-based outlets doing as well as those in the south, Mr Kaye said. He added that restaurants generally were a better area to be in than other parts of retail.

The group put up prices a couple of months ago to offset rising utility, wage and food bills but Mr Kaye said its promotional activity in the first half of 2011 was no greater than in the previous year.

Douglas Jack, an analyst at Numis, kept his profit forecast of £16.1 million for 2011 unchanged, which he said allowed for tougher conditions in the second half of the year.