Three bidders compete to swallow PizzaExpress

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The Independent Online

PizzaExpress signalled that it was inching towards being taken over yesterday, as it posted a sharp fall in profits and sales across its estate.

PizzaExpress signalled that it was inching towards being taken over yesterday, as it posted a sharp fall in profits and sales across its estate.

The group, a former stock market darling, is exploring three bid approaches, including a management buyout led by David Page and an offer from Luke Johnson, a former owner.

Nigel Colne, the chairman, said the bid process was well advanced. "[An announcement] is measured not in many, many months but is fairly imminent," he said, adding it depended "on three third parties, as well as political and economic factors [which have affected trading]."

Analysts said a bid could be worth up to 350p per share, helping to push the group's shares 6 per cent higher to 321.5p. They traded at 800p a year ago.

The group said like-for-like sales at its London restaurants were continuing to plummet, despite efforts to revamp the brand. The company is attempting to lure back its customers, who have defected to rival chains such as Ask, Strada and Zizzi, by refurbishing the shabbier outlets and adding new products to its menu.

In December, it bowed to years of abuse for allegedly making its pizzas smaller by introducing new 11-inch pizzas across its estate. "Pi r squared gives you an extra 20 per cent for the same price," Paul Campbell, the finance director, said.

Underlying sales at its restaurants within the M25 fell by 10 per cent in the half-year to 31 December. Like-for-like sales in the rest of the country also slowed, reflecting a step up in competition, contributing to a 4.8 per cent slide in pizza sales for the six-month period.

Pre-tax profits (excluding exceptional costs of £600,000 relating to the bid talks) fell 18 per cent to £17.8m on sales up 8 per cent to £112m. The group operating margin fell to 15.6 per cent from 20.8 per cent a year earlier, despite efforts to keep a lid on costs.

Analysts criticised the lack of detail provided about the refurbishment programme, which is expected to cost £11m and involve 128 restaurants this year. Greg Feehely, at Arbuthnot, said: "The admission that 'immediate prospects remain uncertain' pretty much confirms our view that management really has no answers to the company's problems."

The group said it was trialling a new name – Marzano – for its Café Pasta chain, which saw like-for-like sales growth slow to 2.4 per cent in the second quarter from 8.5 per cent in the first. Its retail operation, which sells pizzas, dough balls and salad dressing in Sainsbury's and Waitrose stores, made operating profits of £1.4m, up from £1m.

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