Los Angeles Business Journal

IHOP Sales Offset Lower DineEquity Profit

By Business Journal Staff Tuesday, October 29, 2013

Shares of DineEquity Inc. hit an all-time high on Tuesday as the restaurant operator beat analysts’ earnings estimates and saw same-store sales rise at its IHOP chain.

The Glendale company reported net income of $18.4 million (97 cents a share) for the third quarter ended Sept. 30, compared to $58.7 million ($3.14) the year earlier. Revenue fell 25 percent to $161 million.

Analysts had expected earnings of 92 cents on revenue of $127 million, according to Thomson Financial.

The earnings decline was mainly due to the company owning fewer restaurants following the completion of its strategy to sell off most of its outlets to franchisees, the company said. DineEquity now owns 35 restaurants, while it franchises 3,399.

Same-store sales at its IHOP restaurants increased 3.6 percent, which the company attributed to higher average guest checks and changes in the menu. Applebee’s same restaurant sales decreased 0.4 percent.

The company spent $10 million during the quarter to repurchase shares, and it will pay a cash dividend of 75 cents a share.

“During the third quarter, we generated substantial free cash flow, which allowed us to return significant cash to stockholders through the combination of a cash dividend payment and share repurchases,” Chief Executive Julia Stewart said in a statement. “I am confident in our strategy for long-term success.”

Shares of DineEquity closed Tuesday up $8.49 or nearly 12 percent to $79.99 in trading on the New York Stock Exchange.