DineEquity’s shares up on earnings news

DineEquity Inc.’s 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 is lagging. Chili’s reported a bigger-than-expected 5 percent drop in same-restaurant sales for its latest quarter.

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 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.