Wendy's Profit, Revenue Tops Expectations

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

The company also said Tuesday it anticipates same-store sales growth above what analysts were expecting, while its earnings forecast was in-line with analyst projections. The company expects adjusted per-share earnings in a range of 35 cents to 37 cents and same-store sales growth of about 3% in North America.

A survey from Consensus Metrix showed analysts projecting same-store sales this year rising 2.5% systemwide, while the consensus view of analysts polled by Thomson Reuters expected per-share earnings of 36 cents in 2016.

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 a preliminary profit 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 due to 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 07:25 ET (12:25 GMT)

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