DineEquity Inc. on Thursday reported first quarter earnings and revenues that fell well short of analysts’ forecasts. The company’s stock dropped nearly 3 percent on a day when the overall markets declined only slightly.
The Glendale restaurant operator and parent company of Applebee’s Neighborhood Grill & Bar and IHOP reported adjusted earnings of $29.1 million ($1.58 per share) for the quarter, down from the $31.1 million ($1.64 per share) for the same period last year. Revenue fell 7 percent to $163 million.
Analysts surveyed by Thomson Financial Network expected net income of $1.69 a share on revenue of $166 million.
DineEquity attributed the decline in earnings to a loss of gross profits due to the sale of its remaining company-operated Applebee’s locations in the third quarter of the last fiscal year in addition to an expected increase in general and administrative expenses.
Same-store sales at IHOP restaurants increased 1.5 percent during the quarter, while Applebee’s comparable sales declined 3.7 percent compared to the year-ago quarter.
“We're aggressively executing our plan to get Applebee's back on track, including the most transformative platform launch in the brand's history in the coming weeks,” Chief Executive Julia A. Stewart said in a prepared statement. “We are confident in the steps currently being taken to drive positive and sustainable sales and traffic at both brands, while remaining committed to returning the majority of free cash flow to our shareholders.”
DineEquity reported net income of $25.2 million ($1.37 a share) for the quarter ended April 30, down from the $28 million ($1.47 a share) reported in the year-ago quarter.
Shares closed down $2.41 or 2.8 percent to $83.21 on the New York Stock Exchange.