US fastfood chain Wendy’s International has reported a 20% rise in quarterly net income, and raised its earnings outlook for 2004.
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The company posted net income of US$52.8m, or 45 cents per share, for the first quarter to 28 March, compared to $43.9m, or 38 cents per share, in the same quarter of the previous year.
First-quarter revenues rose 20% to a record $835m. Same-store sales rose 9.1% at Wendy’s US company outlets, 7.6% at Wendy’s US franchise stores, 6.6% at Tim Hortons Canada and 10.3% at Tim Hortons US, but declined 4.9% at Baja Fresh Mexican Grill.
Earnings in the quarter were positively impacted by about 3.5 cents per share due to the improvement in the Canadian exchange rate related to Tim Hortons’ income. Offsetting the benefit was a 34% increase in beef costs for the quarter and a segment loss of $2.6m for Baja Fresh.
The company and its franchisees opened 80 new restaurants systemwide during the quarter. The openings consisted of 41 Wendy’s, 25 Tim Hortons and 14 Baja Fresh restaurants.
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By GlobalData“Our core businesses are focused on superior restaurant operations, new product introductions and promotions, strong marketing and continuous improvement,” said CEO Jack Schuessler. “We continue to innovate within our core business to ensure that our brands remain relevant to consumers.”
“At Baja Fresh, we are striving to improve the chain’s financial performance after disappointing first quarter results,” Schuessler added.
Based on its strong first-quarter performance, Wendy’s raised its outlook for 2004 earnings per share growth from a range of $2.27 to $2.32 to a revised range of $2.32 to $2.37. The revised range represents a 13-16% increase over the company’s 2003 earnings of $2.05 per share.
“During the first quarter we produced strong revenue and income growth, managed costs effectively and overcame exceptionally high beef prices,” said chief financial officer Kerrii Anderson. “We expect good sales growth to continue at Wendy’s and Tim Hortons and we remain focused on costs throughout the enterprise, yet we are still faced with short-term challenges at Baja Fresh.”
The company said its beef prices will be lower in the second quarter than originally anticipated. Commodity costs for key items such as chicken and produce will remain stable as Wendy’s has annual contracts that lock in prices.
