UPDATE 4-Applebee’s improves, DineEquity shares soar

* Q3 adjusted EPS $0.95 vs Street view $0.68

* IHOP Q3 domestic same-restaurant sales up 0.1 percent

* Applebee’s domestic Q3 same-restaurant sales up 3.3 pct

* Offers improved 2010 Applebee’s same-store sales outlook

* Shares surge 13.5 percent
(Adds executive comment, details on quarter, byline)

By Lisa Baertlein

LOS ANGELES, Nov 2 (BestGrowthStock) – DineEquity Inc’s (DIN.N: )
Applebee’s chain posted its first quarterly gain in sales at
established restaurants in more than two years and shares rose
13.5 percent.

The company has been working to improve results at
Applebees’s since its IHOP chain bought the restaurant operator
in a $2 billion leveraged buyout in 2007.

Sales also improved at IHOP, and the gains at both
restaurant chains helped DineEquity turn in third-quarter
profit that beat Wall Street’s expectations.

During the quarter, domestic systemwide same-store sales,
or sales at all U.S. restaurants open at least 18 months, rose
3.3 percent at Applebee’s and 0.1 percent at IHOP.

Applebee’s had not posted a gain in quarterly
same-restaurant sales since the first quarter of 2008, Chief
Executive Julia Stewart said on a call with analysts.

At Applebee’s, price increases, a menu update and the
promotion of Sizzling Skillets contributed to higher guest
spending per visit.

A promotional tie-in with the animated feature film
“Despicable Me,” as well a Kids Eat Free dinner promotion
during the month of August helped boost sales at IHOP.

Traffic declines partially offset the impact of diners
spending more money per visit at each of the chains.

DineEquity also offered an improved outlook for Applebee’s
2010 domestic system-wide same-store sales. It now sees a range
of a 1 percent decline to a 1 percent gain instead of its prior
forecast range of flat to down 3 percent.

CEO Stewart credited strength at Applebee’s and the
refinancing of all outstanding securitized debt at attractive
terms for the improved full-year outlook.

DineEquity maintained its 2010 outlook for domestic IHOP
same-store sales, with a range of up 1 percent to down 1
percent.

While Applebee’s and IHOP appear to be participating in a
modest improvement in full-service restaurants, Applebee’s
rival Chili’s (EAT.N: ) is lagging.

Chili’s reported a bigger-than-expected 5 percent drop in
same-restaurant sales for its latest quarter. [ID:nN27243814]

DineEquity shares rose $5.70 to $48.04 in midday trading on
the New York Stock Exchange. Stock in Chili’s parent Brinker
International Inc was up 1.9 percent.

Glendale, California-based DineEquity on Tuesday said
third-quarter net income slipped to $7.8 million, or 44 cents
per share, from $7.9 million, or 46 cents per share, a year
earlier. The company had a higher number of shares outstanding
in this year’s quarter.

Excluding items, the company had a per-share profit of 95
cents. Analysts on average were looking for a profit of 68
cents per share, according to Thomson Reuters I/B/E/S.

Revenue inched up to $335.4 million, topping the $331.7
million analysts had expected.

Applebee’s company-operated restaurant operating margin
improved to 14.8 percent from 13.6 percent a year earlier. The
company cited higher menu prices and favorable commodities
costs.

The company expects 2010 restaurant operating margins at
Applebee’s company-operated stores in the range of 14.25
percent to 15 percent, up from its previous expectations of
13.5 percent to 14.5 percent.
(Reporting by Lisa Baertlein in Los Angeles and Ben Klayman in
Detroit. Editing by Derek Caney, Dave Zimmerman and Robert
MacMillan)

UPDATE 4-Applebee’s improves, DineEquity shares soar