Pizza Express speaks out amid restaurant closure fears and £1.1billion debt

Mirror Online Finance 1 month ago

High street restaurant chain Pizza Express has spoken out on rumours of potential store closures after announcing it was more than a billion in debt.

The company reportedly called in auditors in October, after its most recent accounts showed the chain's total debt was £1.12billion - working out at £1.79million a restaurant.

However, in a statement to the markets today, Pizza Express painted a very different picture.

Despite the debts and the inevitable a high street slowdown that's led to closures of Jamie's Italian and Prezzo, it said 95% of branches remain "profitable" with no imminent closure plans.

In fact, the amount of money it's brining in is rising.

"Based on our unaudited preliminary management accounts for the 13-week period between July 1, 2019 and September 29, 2019, Group revenue increased by £1.6million to £138.6million," the statement reads.

However, UK growth in the same period was down 1.1%, taking earnings before tax to £19.9million.

It said that in the UK and Ireland, sales continue to be impacted by low consumer confidence and uncertainty around Brexit - but denied claims that branches are at risk.

Sources close to Pizza Express have been quick to deny it is close to collapse or considering a company voluntary arrangement (CVA)

In this past 13, weeks, the chain has opened three new sites and closed one - taking its total UK base to 482 branches altogether.

"Approximately 95% of our UK & Ireland restaurants are profitable and there are no plans for closures outside the normal course of business," a statement said.

Speaking of future plans, it said its "FutureExpress" model continues, which includes the refurbishment of five existing sites in the UK and Ireland.

However, the firm added that it continues to assess its "future funding options", in terms of investment and working capital.

Pizza Express insisted its 482 UK and Ireland estate were not under threat of closure, despite falling UK sales

Pizza Express recently appointed financial advisors Houlihan Lokey to help manage its £1.12billion debt.

Its Chinese owner, Hony Capital, has also announced plans to pump another £80million into the restaurant chain as its struggles continue.

Hony Capital said it plans to offer the cash injection to buy back debt owed to bondholders in 2022.

The group has to pay the first instalment of its debt repayments, worth £465million in secured bonds, by August 2021.

Its next repayment for £200 million in unsecured loans is due to be repaid by the following year.

“Intense competition in the casual dining sector encourages innovation and we are constantly seeking ways to increase appeal to new and existing customers," PizzaExpress chief executive Jinlong Wang said back in October.

"Looking ahead, whilst we expect both the UK and Ireland and International markets to remain challenging, we are confident in our ability to successfully appeal to customers and believe that we will continue to deliver a resilient performance across the remainder of 2019," he added.


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