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CPK posts uptick in 2nd-Q profit

LOS ANGELES Strong sales of licensed grocery products, cost controls and a traffic-building restaurant promotion helped California Pizza Kitchen post a 3.8-percent increase in second quarter profit despite a difficult economic environment, company officials reported Thursday.

For the quarter ended June 29, California Pizza Kitchen posted net income of $6.6 million, or 26 cents per share, compared with profit of $6.3 million or 21 cents per share in the prior-year period.

Because of the encouraging results, CPK officials raised their full-year earnings guidance from a range of 59 cents to 65 cents per share to a range of 65 cents to 70 cents per share. Because of the challenging macroeconomic climate, however, they maintained their outlook that full-year same-store sales would fall 1 percent or remain flat.

For CPK's latest quarter, same-store sales overall increased a better-than-expected 1.4 percent, compared with 5.4 percent in the year-ago period. Revenues grew 11.3 percent to $176.6 million.

Rick Rosenfield, CPK's co-chief executive, credited the chain’s Thank You Card program, which rewarded return visits with the offer of prizes and discounted meals. That promotion alone boosted earnings by an estimated 6 cents per share, officials said.

Also beneficial to the bottom line were ancillary revenue streams, such as the company’s partnership with Kraft in offering branded frozen pizzas in grocery stores, CPK said. During the quarter, wholesale revenue totaled $41 million, a 42-percent increase over the prior year. During the quarter, grocers started selling a CPK-brand, microwavable pizza-for-one in their frozen-food departments. Chain officials said non-pizza products are coming, but declined to cite details.

The company opened three full-service restaurants during the second quarter and closed one in Baltimore because its lease was up. International franchise partners opened three stores, one each in Japan, Korea and Mexico.

Before the end of the fiscal year, CPK is on track to open 12 full-service namesake restaurants and a second location of sister brand LA Food Show. Two domestic CPK/ASAP franchise locations are scheduled to open this year, as are nine full-service franchise locations in other countries.

At the end of the quarter, California Pizza Kitchen operated or franchised 242 restaurants worldwide under the full-service namesake brand, the limited-service CPK/ASAP and full-service LA Food Show brands.

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