Despite posting a quarterly loss, shares in causal dining chain operator Ihop Corp. shot up nearly 13 percent early Wednesday after the company said it expects strong sales in 2008.
Ihop reported a loss for the quarter ended Dec. 31 of $16 million (-94 cents per share), compared to a profit of $10.3 million (57 cents) for the same period a year earlier.
The loss was almost exclusively due to charges associated with the Applebee's International Inc. acquisition, which was announced in November.
The charges associated with the deal include a $16.1 million expense, which stemmed from a rate swap transaction that was needed to finance the deal, as well as higher interest expenses due to increased debt levels, higher general and administrative expenses and asset impairment and closure charges for the $1.9 billion deal.
Analysts polled by Thomson Financial expected earnings of 53 cents per share.
Sales for the Glendale-based company more than doubled to $214 million, as sales from about one month of Applebee's franchise operations helped and partly offset the expenses and charges associated with the acquisition, Ihop said in a statement.
Same store sales grew 3.7 percent at the company's namesake stores while Applebee's same-store sales fell 2.9 percent.
For the year, Ihop swung to a loss of $2.2 million (-13 cents per share), compared to a profit of $44.6 million ($2.43) for 2006. Sales grew 39 percent to $485 million.
The pancake house added that it expects same-store sales at its Ihop restaurants to grow between 2 percent and 4 percent in 2008 while same store sales at its new Applebee's chain should grow between 1 percent and 2 percent.
Shares in Ihop shot up nearly 13 percent to $45.01 in early trading Wednesday on the New York Stock Exchange.
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