UPDATE 1-DineEquity profit beats on lower costs; plans job cuts
By Dhanya Skariachan
July 31 - Restaurant chain operator DineEquity Inc reported a better-than-expected quarterly profit on Tuesday, helped by lower costs and strength in its Applebee's business.
Shares of DineEquity, which also owns the IHOP restaurant chain, rose 7.6 percent to $49.68 in morning trading on the new York Stock Exchange.
The results were a bright spot in a restaurant industry that has seen some disappointing numbers in recent weeks, including earnings from McDonald's Corp and Chipotle Mexican Grill Inc and sales at Olive Garden owner Darden Restaurants Inc.
Lackluster job growth and weak consumer confidence make some diners reluctant to spend money on meals away from home.
DineEquity said it plans to cut costs further by eliminating 100 jobs. The action is expected to generate $10 million to $12 million in savings on an annual basis, it said.
The company also said Jean Birch, president of its IHOP business, will leave the company effective Aug. 27. DineEquity Chief Executive Julia Stewart will assume day-to-day leadership of the brand until a successor is found, the company said.
Systemwide sales at established U.S. restaurants were up 0.7 percent at Applebee's and down 1.4 percent at IHOP in the second quarter.
Overall revenue fell 14.5 percent to $229.4 million.
Net income was $15.9 million, or 88 cents a share, compared with a net loss of $284,000, or 2 cents a share, a year earlier. Excluding items, the company earned $1.06 a share, beating analysts' average estimate of $1.01, according to Thomson Reuters I/B/E/S.
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