Wendy's Profit, Revenue Top Expectations -- Update

By Joshua Jamerson 

Wendy's Co. reported fourth-quarter profit that beat expectations as it continues to see benefits from operating fewer of its restaurants itself.

Shares of Wendy's, up 7.9% over the past three months, rose 3.5% to $10.50 in light premarket trading as the company also said it expects same-restaurant sales growth for the current year above what analysts were expecting.

Wendy's said it sees same-store sales growth in 2016 of about 3% in North America, above the projection of 2.5% by analysts surveyed by Consensus Metrix. The company also projected adjusted per-share earnings between 35 cents and 37 cents, in-line with the consensus view of 36 cents by analysts polled by Thomson Reuters.

Like many other restaurant chains, including McDonald's Corp. and Burger King, a unit of Restaurant Brands International Inc., Wendy's has sought a more stable cash flow and higher profits by selling its company-owned restaurants to franchisees. Wendy's cited its reduced ownership of restaurants as a reason for its higher results in the quarter, and said it plans to sell about 315 more restaurants during 2016.

Wendy's said same-restaurant sales at North American restaurants rose 4.8% in the quarter and 4.9% at its franchise-operated locations. The Consensus Metrix projection was for 3.1% growth at franchised restaurants.

Wendy's had moved from having 78% of its restaurants owned by franchisees to 85%, and plans to have 95% of its restaurants franchised this year.

Over all, Wendy's posted earnings of $85.9 million, or 31 cents a share, compared with a year-earlier profit of $23.3 million, or 6 cents a share. Excluding certain items, earnings from continuing operations were 12 cents a share, up from 8 cents a year ago.

Analysts, on average, had expected 11 cents a share, according to Thomson Reuters.

Revenue slipped 4.7% to $464.4 million, largely because of the ownership of 363 fewer company-operated restaurants in the period. Analysts had forecast $456 million in revenue.

Wendy's said it expects to file its audited results by March 3.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

February 09, 2016 08:21 ET (13:21 GMT)

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