PizzaExpress - comment

The consumer retail environment in the UK keeps getting tougher this year. We are slightly disappointed by this morning’s release of revenue and gross margin, coming in with an EBITDA -10% (£-4m) lower than we had expected at only £12m for the second quarter (albeit £4m better in exceptional items). Otherwise, the results are as expected, safe for the working capital inflow that we had somewhat artificially modelled (see highlighted figures and comments under model) to finance the recapitalisation. Management expects the usual cash inflow in Q4. Cash is therefore at a low £11m, and the small RCF is now already £7m drawn. That should provide sufficient liquidity for the next 12 months, and management point to their array of initiatives that should drive EBITDA as per the plan pre-restructuring, although in a tougher environment.