Shares of DineEquity Inc. jumped more than 4 percent Thursday after the release of the company’s second-quarter financial results and the news of hiring a new chief executive.
The Glendale restaurant company has hired hospitality industry veteran Steve Joyce as its top officer. The company also announced plans to close about 160 locations of its Applebee’s and IHOP restaurants.
“We are investing in the empowerment of our brands by improving overall franchisee financial health, closing underperforming restaurants and enhancing the supply chain,” Richard Dahl, DineEquity interim chief executive, said in a statement. “(We) ... expect to see improvement over the next year.”
DineEquity reported adjusted earnings of $23 million ($1.30 a share) for the three months ended June 30. While the figure exceeded Wall Street expectations of $1.17 a share, it represented a drop of about 20 percent year over year. Net income for the same quarter last year was $28.8 million ($1.59).
The company blamed the decline on another quarter of poor performance by its Applebee’s locations, where same-restaurant sales declined 6.2 percent.
Revenue for the second quarter was $155 million, a decline of about 3 percent from the same period a year earlier and slightly below analysts’ expectations.
Part of DineEquity’s recovery plan includes shutting down more restaurants. Up to 135 Applebee’s locations and as many as 25 IHOPs will be shuttered this fiscal year, the company said. It also will focus on improving its performance through new technology and marketing initiatives, such as the development of an IHOP mobile application and online ordering, with Joyce leading the way.
Joyce is a longtime DineEquity board member who previously served as chief executive of Choice Hotels International Inc., a publicly traded 6,500 unit hotel franchise based in Rockville, Md. He is credited with navigating the firm successfully through the Great Recession. The stock price of Choice Hotels doubled during his tenure to surpass its pre-Recession high of more than $60 a share.
DineEquity stock (DIN) rose $1.52, or around 4 percent, on Thursday to close at $38.81 on the New York Stock Exchange.