Wall Street chopped 13 percent off DineEquity Inc.’s share price Tuesday, as investors pick out troubling trends in the restaurant operator’s otherwise better-than-expected earnings.
The Glendale owner of Applebee’s Neighborhood Grill & Bar and IHOP Restaurants chains, reported net income fell 58 percent to $12.8 million (75 cents per share), compared with $30.6 million ($1.80) a year earlier. Revenue dropped 5 percent to $358 million.
Excluding special items, profit was $1.08 per share. Analysts surveyed by Thomson Reuters expected adjusted per-share earnings of 78 cents on revenue of $360 million.
Domestic systemwide sales at IHOP locations open at least a year fell 0.4 percent, and was down 2.7 percent at Applebee’s. The figure is an indicator of a restaurant operator’s performance because it measures results at existing restaurants rather than newly opened ones.
While Applebee’s same-store declined less than they did a year earlier, traffic was down at company-operated outlets and guests spent less per visit — despite advertising and promotions. Applebee’s company-operated operating margin fell to 14.8 percent from 16.3 percent a year earlier.
The year-ago quarter included a $26.4 million debt extinguishment gain compared with a much smaller $3.6 million gain this year. Total costs and expenses rose 2 percent to $328 million.
The company maintained its full-year forecast for IHOP’s domestic systemwide same-store sales to between 1 percent lower and 1 percent higher. It expects the sales figure to be flat to 3 percent lower at Applebee’s.
“While the consumer spending environment remains challenging, both brands are well positioned to drive sustainable same-restaurant sales momentum and create even greater value for our shareholders,” said Chief Executive Julia A. Stewart in a statement.
The company has 3,450 restaurants.
Shares closed down $5.53, or 13 percent, to $36.97 on the New York Stock Exchange.
