* Third-quarter adjusted profit/share from continuing ops
* Analsysts expected adjusted profit/share of $0.05
* Sales $636.3 mln vs estimates $640.2 mln
* Reiterates adjusted full-year EBITDA outlook
* Shares rise 7 percent
By Aditi Shrivastava
Nov 8 Wendy's Co, the second-largest
U.S. hamburger chain, reported a 2.7 percent increase in
quarterly sales at established company-operated restaurants in
North America, helped by re-branding and introduction of new
Shares of the company, which also doubled its dividend and
announced a new share repurchase program, rose as much as 7
percent in morning trade.
The company is undergoing an image revamp - a process it
calls Image Activation - that includes a new logo, spruced-up
restaurants and fewer company-operated restaurants, to reduce
capital spending and boost margins.
Restaurant operators have been battling sluggish demand as
customers curtail spending due to the slow pace of economic
recovery in the United States.
Wendy's image revamp and introduction of new products like
Bacon Portobello Melt have helped the company win market share
from larger rival McDonald's Corp, which on Thursday
reported its first monthly same-store sales fall since March
"Wendy's combination of new menu innovation and more modern,
reimaged restaurants is gaining traction among consumers,"
analyst Sara Senatore of Sanford C. Bernstein & Co said in a
On a post earnings call with analysts, Chief Financial
Officer Stephen Hare said the company had the flexibility to
invest up to $500 million for Image Activation by the end of
"Average annualized sales volumes for the restaurants we
reimaged during 2011 have increased more than 25 percent," Chief
Executive Emil Brolick said in a statement.
"We remain on track to reimage 50 percent of our
company-operated restaurants by the end of 2015," Brolick added.
As of Sept. 30, the Dublin, Ohio-based company had cash and
cash equivalents of $453.6 million.
"Over the long run, we believe Wendy's will benefit from its
Image Activation renovation program," Janney Capital Markets
analyst Mark Kalinowski said.
However, Kalinowski was cautious about growing competition
in the burger segment and rising commodity costs.
Resurgent rivals like Burger King Worldwide Inc and
Yum Brands Inc's Taco Bell have also stepped up
promotional activity with revamped menus, low-priced food and
catchy advertising to lure diners.
Wendy's, known for its square ground-beef patties, has more
than 6,500 franchise and company-operated restaurants worldwide.
Wendy's adjusted quarterly profit missed Wall Street's
estimates as it increased spending on marketing.
Excluding a pre-tax charge of about $50 million from early
extinguishment of debt, Wendy's reported adjusted earnings from
continuing operations of 3 cents per share.
Analysts on average had expected a profit of 5 cents per
share, according to Thomson Reuters I/B/E/S.
Revenue rose 4.1 percent to $636.3 million due to an
increase in average check, but missed estimates of $640.2
However, Wendy's reiterated its full-year outlook for
adjusted EBITDA from continuing operations of between $320
million and $335 million, including the impact of superstorm
The company's shares were up 3 percent at $4.40 in afternoon
trading on the Nasdaq.