Pizza Express losses widen amid strain on casual dining sector
Pizza Express has reported hefty losses for the full year as it battles with increased competition in the casual dining sector.
The restaurant chain posted a loss of £55.8m in 2018, an increase of more than 40 per cent from £31.6m the previous year.
Read more: China expansion and UK troubles take slice out of earnings at Pizza Express
Net debt stood at £607.7m at the end of the year, or over £1.12bn including a loan from Pizza Express’s parent company.
Chairman and chief executive officer Jinlong Wang blamed the figures on increased labour and property cost pressures in the UK, as well as increased competition in China. He also cited last year’s “extreme weather” as a factor in the disappointing results.
In April, Pizza Express unveiled a 15.3 per cent fall in group earnings before interest, tax, depreciation and amortisation (Ebitda) to £80.2m and a 1.6 per cent rise in revenue to £543m.
But the announcement did not include figures on losses and debt, which can be seen in the company’s full accounts.
Speculation has been mounting in recent months that vulture funds are circling Pizza Express as they look to cash in on the ailing chain’s struggles on the high street.
Russ Mould, investment director at AJ Bell, told Morning Wire that while the drop in Ebitda was to be expected in current market conditions, the near doubling of pre-tax losses was more concerning.
“One big difference between the two is interest costs, which were over £90m last year, as a result of Pizza Express’s enormous debt pile, and those liabilities will be a severe burden given current trading,” he said.
Mould also criticised the “regrettable trend” of companies using non-statutory measures of profit.
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“If a company does not provide a product to customers at a price they want to pay, it doesn’t matter how prettily-presented the numbers are,” he said.