USA: Wendy's announces key financial goals for 2002, investment in Cafe Express
Wendy's International, Inc. (NYSE: WEN) announced today during a meeting with the investment community its major financial goals for 2002. Additionally, the company announced that it will make a strategic investment in the fast-casual restaurant segment.
The firm's major financial goals for 2002 include to produce revenue growth of between 7% and 8%. Same-store sales growth at Wendy's US restaurants should be between 3% and 3.75%, which is in line with the chain's ten-year average; same-store sales growth in the 5% to 6% range at Tim Hortons restaurants in Canada; and 6% to 8% at Tim Hortons US.
A total of between 515 and 540 new restaurants will be developed, with the new unit openings concentrated in North America - Wendy's in the US and Tim Hortons in Canada.
A 20- to 30-basis point improvement will be made to Wendy's domestic operating margins, with an increase in general and administrative costs of 5.75% to 6.75%. Wendy's continues to focus on strategic initiatives, tight control of headcount and spending on projects that can generate a high return on investment. A 25-basis point reduction will meanwhile be made in the corporate tax rate, down from 37% in 2001 to 36.75%.
Earnings per share are estimated in a range of US$1.83 to US$1.88, up 11% to 14% from US$1.65 in 2001. The company's long-term goal for annual earnings growth continues to be in a range of 12% to 15%. Average diluted shares outstanding in the 115 million to 117 million range.
The company's 2002 earnings goal anticipates a positive effect of US$0.07 per share from the repurchase of common shares in 2001, and US$0.02 per share from a change in goodwill accounting and the lower tax rate. The 2002 earnings goal also assumes several elements that will negatively effect earnings. They include: the weakening Canadian dollar; lower asset gains; and lower interest income.
Wendy's expects capital expenditures in the range of US$325m to US$350m, plus investment spending in the Tim Hortons joint venture with IAWS Group/Cuisine de France and potential investments as part of its M&A strategy. Ongoing improvement in return on equity, and long-term improvement in return on assets and return on invested capital.
Chairman and CEO Jack Schuessler commented: "We are optimistic about delivering another good year in 2002.
"Our Wendy's business has momentum with 6.5% to 7.0% same-store sales growth in January. We are focused on outstanding restaurant operations and we have an exciting new product at Wendy's with our Garden Sensations(TM) salads. At the same time, Tim Hortons has excellent sales momentum. Consumers continue to embrace our quality brands.
We believe that our goals for sales and earnings are achievable and prudent, especially considering the uncertain economy."
Investment in Cafe Express
As part of the company's mergers and acquisitions strategy, management announced plans to make a US$9m to US$10m investment in Cafe Express, a leader in the emerging fast-casual restaurant segment.
Cafe Express operates 13 restaurants in Houston, Dallas and Phoenix, and is led by founders Lonnie Schiller and Robert Del Grande, a renowned chef. Schiller and Del Grande will continue to manage the chain, which was founded in 1984.
Cafe Express features high quality food that consumers consider 'upscale bistro'. The average size of the restaurants is 5,500ft² and average unit volumes are US$2.2m.
Schuessler explained: "Cafe Express is an outstanding concept that features high quality food with flavors that are right on trend [...] It's a great blend of outstanding food, customization and environment.
"We are very impressed with the management team and their focus on restaurant operations and quality. They have the same values and principals that we do.
"Our goal is to provide access to capital for Cafe Express so that they can grow the concept. We offer their management team access to our areas of expertise and experience strength such as restaurant operations, new restaurant development, site selection, research and marketing."
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