NEW YORK (AP) -- The owner of Applebee's and IHOP on Tuesday posted net income that beat Wall Street expectations, as the company cut costs and progressed in its efforts refranchise its restaurants.
DineEquity Inc. said it also plans to cut about 100 jobs to further reduce costs. It also announced that the head of its struggling IHOP chain would leave the company.
At its Applebee's restaurants, DineEquity said sales at locations open at least a year rose 0.7 percent, as higher spending per visit offset by a decrease in traffic. Revenue from established locations is a key metric because it strips out the effect of newly opened and closed locations.
At IHOP, the sales figure declined 1.4 percent as a result of fewer customer visits. DineEquity said that Jean Birch, president of IHOP, will leave the company at the end of August and that CEO Julia Stewart will assume responsibilities for the chain until a replacement is found.
In the second half of the year, DineEquity expects to close three deals to refranchise Applebee's restaurants in Virginia, Missouri, Indiana and Michigan. That will complete DineEquity's transition to a 99 percent franchised company. Once the deals close, DineEquity said it will provide revised guidance for the year by early in the fourth quarter.
The company noted it expects to book about $4 million in severance costs during the current quarter in relation to the layoffs, which will be offset by general and administrative savings of $2.5 million. The job reduction is expected to eventually generate about $10 million to $12 million in annualized savings, the company said.
For the three months ended June 30, DineEquity earned $15.9 million, or 88 cents per share. That's compared with a loss of $284 million, or 2 cents per share, in the year-ago period, when the company booked higher impairment charges related to the closure of restaurants.
Not including one-time items, the company said it earned $1.06 per share in the latest quarter. By that measure, analysts on average expected a profit of 99 cents per share.
Revenue for the quarter was $229.4 million, down from $268.3 million before the company franchised more of its restaurants. Analysts expected revenue of $224.8 million.
Based in Glendale, Calif., DineEquity operates about 3,500 restaurants in 18 countries.
Shares of the company added 11 percent, or $5.29, to $51.47 in morning trading.
