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Issue Date: Vol. 51, No. 12, December 2011, Posted On: 11/10/2011

CEC Entertainment Sales Drop; No Comment On Reports Of Dismissed Lawsuit

Marcus Webb
Chuck E. Cheese's, CEC Entertainment Inc., third quarter, Chuck E. Cheese lawsuit refiling, Michael Magusiak, Debbie Keller, redemption game, arcade, arcade game, family entertainment center, amusement business

IRVING, TX -- CEC Entertainment Inc., Chuck E. Cheese's parent company, reported that comparable store sales dropped 6.3% for its third quarter ended Oct. 2, 2011, compared with the same quarter last year.

Total revenues for the period decreased 3.5%, or $7.1 million, to $200 million versus $207.1 million for the third quarter of 2010. | SEE REPORT

Management was disappointed in these results, said president and chief executive Michael Magusiak. He pointed to a decline in consumer confidence; a relative increase in sunny weather in major markets (i.e., the Northeast and Midwest) which permitted families to enjoy more outdoor activities; and increased competition for leisure budgets from certain PG-13 rated movies.

CEC said it expects comparable store sales for the fourth quarter to be down 4% to 5%. Executives said they expect fiscal year 2012 comparable store sales to be flat to up 2%.

Nevertheless, Magusiak said CEC management remains confident that the chain enjoys a strong market position thanks to plans for stronger marketing and sharply accelerated increases in the rate of new store expansion in the U.S. and abroad.

CEC expanded 25% of its existing stores in the past five years and will strengthen its birthday party marketing next year, Magusiak said. The chain will open one brand-new U.S. store and relocate three U.S. stores by year-end, he said.

Over the next two years, Magusiak said CEC will open up to 30 new or relocated stores in the U.S. International growth of the chain's franchise store base is also expected to continue strongly in 27 nations, he said. These include 15 countries in Latin America, six nations in Asia and six in the Middle East.

During a conference call with investors to discuss fiscal results, CEC executives offered no comment on reports that a civil lawsuit against the company had been dismissed in California.

Last spring, a customer filed a complaint against the company, arguing that certain Chuck E. Cheese's arcade games are illegal gambling devices. | SEE STORY

CEC and its franchisees operate 556 Chuck E. Cheese's stores located in 48 states and seven foreign countries or territories.

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