IHOP Net Income Drops 27%

IHOP Corp., the Glendale-based chain of pancake restaurants, Thursday attributed a 27% drop in fourth-quarter profit to the franchising of fewer company-developed outlets.

Sales at restaurants open at least a year jumped 6% in the period ended Dec. 31, in part because of a stuffed crepes promotion, the company reported.

IHOP reported profit of $8.8 million, or 41 cents a share, compared with $11.95 million, or 56 cents, in the year-earlier period. Analysts surveyed by Thomson First Call had forecast about 47 cents a share.

Revenue declined 4.3% to $102.8 million from $107.4 million, reflecting a $5-million drop in sales at fewer company-operated restaurants and a $7.7-million decline in financing revenue.

IHOP recently revised its business model to become primarily a franchiser rather than an operator. It has more than 1,160 restaurants in the United States and Canada.

Management confirmed that it expected to earn $1.65 to $1.75 a share for 2004. First Call’s average analyst projection is for earnings of $1.75 a share. For full-year 2003, IHOP’s net income dropped 10% to $36.8 million.

Shares of IHOP closed at $37.52 on Thursday, up 39 cents on the New York Stock Exchange.