OVERLAND PARK Kan. Continued soft sales, charges for restaurant closures and expenses related to the company's review of strategic alternatives drove first-quarter profit at Applebee's International Inc. down 65.1 percent from a year ago.
The casual-dining company's revenues fell 0.3 percent to $337.6 million on a systemwide same-store sales drop of 4 percent.
For the quarter ended April 1, net income totaled $9.5 million, or 13 cents per share, down from $27.2 million, or 36 cents per share, a year ago. Applebee's said that in its latest quarter it booked costs related to discontinued operations, impairment, restaurant closures, and the review of strategic alternatives totaling $17.6 million, or 23 cents per share.
Applebee's, which now operates or franchises about 1,930 namesake restaurants after the recent closure of 24 underperforming units, has suffered from soft sales for more than two years. It drew pressure from SEC-chairman-turned-activist-investor Richard C. Breeden, and the company announced in February it would review corporate alternatives, including a sale of the company.
Applebee's also reported a domestic, systemwide same-store sales decrease of 0.7 percent for the four weeks ended April 29. Same-stores sales at corporate restaurants decreased 0.8 percent, the company said, reflecting a drop in guest traffic of between 2 percent and 2.5 percent, an improvement from traffic declines of more than 5 percent in prior periods.
"We are particularly pleased with our traffic improvement since launching our Pick 'N Pair lunch program in early March," president and chief executive Dave Goebel said in a statement. "Our key strategic initiatives in 2007 include continued improvement of our food, evolution of our advertising, and a greater emphasis on communicating our value proposition to our guests."
