DineEquity Inc. said that its first quarter profits more than doubled, largely due to sales growth at its higher-margin Applebee’s restaurants. The company also raised its overall sales guidance.
The Glendale operator of the Applebee’s and IHOP casual dining chains on Tuesday reported net income of $28.1 million ($1.53 per share), compared with $13 million (75 cents) a year earlier. Revenue fell 16 percent to $300 million as sales at IHOP restaurants open more than a year were down 2.7 percent. However, same-store sales at Applebee’s locations, which have a pricier menu, were up 3.9 percent
The results also were helped by elimination of the dividend on the company’s Series A perpetual preferred stock. Excluding the dividend and other one-time items, adjusted per-share profit was $1.42. Analysts surveyed by Thomson Reuters on average expected adjusted per-share profit $1.16 on revenue of $295 million.
DineEquity said it expects full-year same-store sales to increase 2 to 4 percent at Applebee’s, up from a previous growth estimate of 1 to 3 percent. At IHOP, the company forecast same-store sales growth in domestic stores of 1 percent to negative 2 percent, in line with its prior guidance.
“Our turnaround initiatives at Applebee’s are delivering meaningful results and have now produced nine consecutive months of positive same-restaurant sales,” said Chief Executive Julia Stewart, who lead the acquisition of Applebee’s in a $2 billion leveraged buyout in 2007.
To reduce debt, DineEquity has franchised company-operated Applebee’s locations. Total debt fell 8.8 percent, or more than $178 million, during the quarter.
Shares closed up $2.85, or 5.7 percent, to $52.65 on the New York Stock Exchange.
