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Pizza Express denies plans to close restaurants despite £1.1billion debt mountain

Nov 7, 2019

PIZZA Express says there are no plans to shut outlets in the UK and Ireland – despite recent fears it was on the verge of collapse.

The 482-strong chain, which has a mammoth £1.1billion debt pile, claimed yesterday: "Approximately 95 per cent of our UK & Ireland restaurants are profitable and there are no plans for closures outside the normal course of business."

The assurances came as the chain’s Chinese owner pumped in £80million to boost its balance sheet and buy back debt from bondholders.

However, the chain admitted trading conditions in the casual dining sector were tough amid Brexit uncertainty and "fragile" consumer confidence.

And its latest trading figures showed UK and Ireland sales falling by 1.1 per cent over the three months to September 29.

The update comes as Pizza Express remains in crunch talks over how to deal with its mountain of debt which triggered fears it could go bust.

Will Pizza Express weather the storm on the high street?

PIZZA Express is putting up a fight in the face of tough trading conditions on the high street.

It is revamping its UK and Ireland business, including restaurant refurbishments – which cost it £500,000 for five sites in the third quarter alone.

But having too much debt is never a good thing – look at Thomas Cook, the travel giant that buckled under its debt burden (and other headwinds).

What's more, while most of Pizza Express’ restaurants remain profitable for now, the UK consumer is very unpredictable at the moment.

This week, retail bosses including Steve Rowe from M&S and George Weston from Primark have warned that the General Election will pile on the uncertainty, making consumers even more “volatile”.

There are bound to be winners and losers on the high street.

However, Pizza Express’ future is unlikely to be decided overnight.

So far, its Chinese backer appears patient, pumping in £80million yesterday.

Should the chain’s fortunes take a turn for the worst, it could try to seek rent reductions or close outlets in a bid to bring costs down. But there are no signs of that just yet.

It hired advisers at corporate finance firm Houlihan Lokey to help talks with creditors.

Speculation began swirling around Pizza Express in the summer as news of the debt talks surfaced.

It was touted as the next on the list of high street dining casualties, after Jamie's Italian collapsed and peers Prezzo and Carluccio's shuttered sites.

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

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

The chain also owes another £467million in loans from Hony, though these do not have to be repaid.

In other business news:

CARNAGE: The Bank of England cut growth forecasts on Thursday and warned of potential interest rate cuts ahead as it delivered its first verdict on Boris Johnson's Brexit deal. The bank’s monetary policy select committee held rates steady at 0.75 per cent.

ASTON SKIDS: Losses at Aston Martin have accelerated to £92.3million as sales volumes slid on “tough trading conditions” in the UK and Europe. The luxury car manufacturer swung to the pre-tax loss for the nine months to September from a £23.9million profit in the same period last year.

SUPERDROUGHT: The boss of fashion chain Superdry says its turnaround plan is making "good progress" despite a sizeable fall in sales. Revenues in the half-year to 26 October fell 11.3 per cent to £367.8million, although the firm said the drop in sales had moderated in recent months.

ALL HAIL HAL: Halfords is revving up its car maintenance business with a new deal. The car parts-to-bicycles chain has snapped up Scottish garage chain McConechy’s Tyre Service for £8.5million cash under plans to double the contribution of service-related sales to group revenues.

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