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Denny’s: 3rd-Q comps fall 5.1%, adjusted income to rise

SPARTANBURG S.C. Denny’s Corp. reported Tuesday that its third-quarter adjusted profit is expected to increase as much as 45 percent from a year ago despite a 5.1-percent drop in systemwide same-store sales.

The family-dining company said it expected third-quarter, pre-tax adjusted income — which excludes restructuring charges, exit costs, impairment charges, asset sale gains, share-based compensation and other non-operating expenses — to total between $8.0 million and $8.5 million, compared with $5.8 million in the year-ago quarter. Denny’s said corporate initiatives including improved menu management, debt reduction, lowered depreciation expenses from asset sales and a focus on growing the higher-margin franchise business were responsible for the improvement.

Revenue for the third quarter ended Sept. 24 is expected to total $189 million, down 21.7 percent from $241.4 million a year ago. Denny’s said the drop is mainly because of the sale of 136 corporate restaurants to franchisees during the past year.

The company, which operates or franchises about 1,538 units, is expected to report full third-quarter results on Oct. 28.

While Denny’s was able to manage its bottom line, sales still suffered during the quarter. Nelson Marchioli, president and chief executive, said that recent sales initiatives had positively impacted the business but were unable to offset reduced consumer spending, particularly in California and Florida.

The chain’s negative systemwide same-store sales result reflected drops of 2.7 percent at corporate units and 6.1 percent at franchised locations. At corporate stores an 8.8-percent drop in customer traffic offset a 6.7-percent hike in check averages, Denny’s reported.

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