IHOP Forecast Misses Estimates

Shares of IHOP Corp., parent of the International House of Pancakes chain, slipped nearly 2% on Monday after the company issued an earnings forecast that fell short of analysts’ estimates.

The Glendale-based company estimated that its earnings for 2004 would come in at $1.65 to $1.75 a share -- essentially flat compared with the estimate given for 2003.

The company is scheduled to announce its final results for fiscal year 2003 on Feb. 26.

Analysts surveyed by Thomson FirstCall had an average estimate of $1.86 a share for 2004.

IHOP’s stock fell 64 cents to close at $36.77 on the New York Stock Exchange.

IHOP, which has 1,165 outlets, said it anticipated revenue in 2004 to be in the range of $1.8 billion to $1.9 billion, compared with the 2003 estimate of as much as $1.6 billion.

“Some of the things they’re doing this year are going to hurt them from a margins standpoint,” said Dennis Joe, an analyst with Sidoti & Co.

In the past, IHOP built restaurants and then charged franchisees a development fee to take over the stores.

Under a plan announced a year ago, franchisees will fund construction costs, which frees up cash for the parent company, but it also eliminates the development fee.

Joe also noted that IHOP was trying to get company-owned restaurants into the hands of franchisees sooner, so it will end up with a mix of company-owned outlets that includes some poorer performing restaurants.

Overall, IHOP expects to add as many as 55 restaurants systemwide in 2004, with most of them slated to open in the second half of the year.

In 2003, company-owned stores open at least 18 months posted a 4.8% sales increase, the company said, its best annual showing in 10 years.