Shares of DineEquity Inc. dropped 18 percent on Tuesday after the restaurant operator said weak sales at its IHOP chain contributed to a second quarter loss and worse-than-expected adjusted earnings and revenue.
The Glendale company, which owns IHOP and Applebee’s Neighborhood Grill & Bar restaurants, reported a net loss of $284,000 (-2 cents per share), compared with net income of $7.44 million (42 cents) in the same period a year earlier. The loss reflects charges related to the termination of a sublease currently occupied by Applebee’s restaurant support center in Kansas, and lower segment profit as a result of refranchising 148 Applebee’s restaurants.
Revenue fell 21 percent to $268 million. Excluding one-time items, adjusted net income was $16.6 million (90 cents). Analysts surveyed by Thomson Reuters on average expected per-share profit of $1.02 on revenue of $269 million.
Applebee’s domestic same-restaurant sales rose 3.1 percent, but IHOP sales fell 2.9 percent as spring seasonal promotions failed to bring in more customers. The company said it expects full-year, same-restaurant sales at IHOP locations to be at the low end of its previous forecast of a 1 percent rise to a 2 percent decline. It continues to expect Applebee’s sales to range between positive 2 percent and 4 percent growth.
“Our second quarter results demonstrate another impressive performance by the team at Applebee’s, where we have now seen a full year of positive same-restaurant sales growth,” Chief Executive Julia Stewart said in a statement. “While we are disappointed with IHOP’s results, we believe we have identified the issues that need to be addressed to develop and execute a plan to restore same-restaurant sales growth.”
Shares closed down $9.84, or 18 percent, to $43.71 on the New York Stock Exchange.
