Shares in PizzaExpress dropped 13% in early morning dealing today after the company released a trading statement showing a further deterioration in like-for-like sales.

The company said like-for-like sales for the 12 weeks to September 22 at PizzaExpress outlets were down 4.4% overall in the UK and Ireland, although outside the M25 sales "are showing like-for-like growth."

The clear implication, although not spelled out, is that like-for-like sales inside the M25 are even further into negative territory than they were. Last month the company said like-for-like sales for the year to 30 June were up 5% year-on-year outside the M25, and down 3% year-on-year inside the M25.

The company said then that it would be investing "significant" money to refurbish its poorer-performing older restaurants, many of which were in the London area.

Today David Page, PizzaExpress's chief executive, said : "The pattern of trading for PizzaExpress has shown no improvement since the last quarter of the 2001 financial year." However, he said, his board was confident that the speeded-up capital investment programme announced last month would restore like-for-like sales in the company's older restaurants within and around the M25, which "remain very profitable."

PizzaExpress said like-for-like sales at its secondary brand, Cafe Pasta, were up 8.5% for the 12-week period, while sales of PizzaExpress products in Waitrose stores are "ahead of internal expectations". Trading at the Gourmet restaurants acquired last year and in the International division are "in line with expectations", the company said.

This morning the shares dropped 31p or 11.03% to 250p, before recovering by 9am to 265p, still 16p down.