US fastfood giant Wendy’s International has reported a 4.2% rise in quarterly net income but lowered its outlook for 2004.
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The company reported net income of US$69.1m, or 60 cents per share, for the third quarter to 26 September, compared to $66.3m, or 58 cents per share, in the same period of last year.
Total revenues increased 13.3% to $914m. Same-store sales increased 2.0% at Wendy’s US company-operated stores, and 0.9% at Wendy’s US franchised stores. The company had previously announced that hurricanes Charley, Frances, Ivan and Jeanne had negatively impacted sales and profits at Wendy’s restaurants throughout the Southeast and Gulf Coast.
Results were also impacted by beef costs, which were 12.0% higher in the quarter than one year ago.
“It was a solid third quarter, considering the sales and cost challenges at Wendy’s,” chairman and chief executive officer Jack Schuessler said. “We have delivered a strong year-to-date performance with net income up 12.9% and earnings per share up 12.1%. While we face challenging sales comparisons at Wendy’s in the fourth quarter, we expect the strong sales growth at Tim Hortons to continue, and we remain focused on controlling costs throughout the organization.”
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By GlobalDataThe company said increased competition and discounting had negatively affected October sales. It also expects beef prices to be 7.8% higher in the fourth quarter than in the year-ago period and tomato prices to be higher due to the impact of recent hurricanes in the southeast US.
Based on fourth-quarter sales trends to date, Wendy’s revised its 2004 earnings-per-share growth goal to a range of $2.19 to $2.25, a 7% to 10% increase over its 2003 earnings of $2.05 per share. The company’s previous estimate was $2.25 to $2.30 per share.
“We are facing some short-term challenges in the fourth quarter, but we continue to focus primarily on our longer-term strategies and remain confident in the overall future of our business,” chief financial officer Kerrii Anderson said.
