* Q2 profit $0.06 excluding items, matching Street view
* Board OKs $50 mln stock buyback program
* Shares rise 2.7 percent
(Adds CEO, analyst comments, details, background, updates
CHICAGO, Aug 6 Wendy's/Arby's Group Inc
WEN.N, the third-largest U.S. fast-food chain, posted a
quarterly profit on Thursday and said July sales trends were
improving, sending shares up 2.7 percent.
The company's board also authorized a $50 million stock
"An encouraging performance, especially when you consider
the early commentary on July," Telsey Advisory Group analyst
Tom Forte said, also citing the strong restaurant margin at
Wendy's and overall cost-cutting and lower commodity prices.
Wendy's/Arby's had second-quarter net income of $14.9
million, or 3 cents a share. Excluding one-time items, it
earned 6 cents, matching what analysts polled by Reuters
Estimates had expected.
Arby's owner, Triarc, bought Wendy's International Inc for
just over $2 billion in September to form Wendy's/Arby's, so
the companies were not merged in the year-earlier quarter.
Consolidated revenue was $912.7 million, below the $925.2
million analysts had expected.
Same-store sales at North American restaurants slipped 0.4
percent at Wendy's and 6.9 percent at Arby's, which has
introduced lower-priced sandwiches rather than discount its
premium-priced roast beef sandwiches amid intense price
At company-owned stores, same-store sales fell 1.2 percent
at Wendy's and 5.8 percent at Arby's. However, in July, they
rose about 2 percent at Wendy's and the decline at Arby's
shrank to about 4.7 percent.
The restaurant margin at company-owned Wendy's was 15.9
percent in the quarter, above the 13.4 percent Forte had
expected. The company expects to top its goal of 160 to 180
basis points of margin improvement for the year at Wendy's.
"We produced significant margin improvement of 370 basis
points at Wendy's, and Arby's continued to show improvement
despite aggressive competitive discounting," CEO Roland Smith
said in a statement.
He said the company remains on track to deliver $100
million in restaurant margin improvement at Wendy's and another
$60 million in general and administrative expenses by the end
"We see significant future revenue opportunities for our
company, including international expansion, dual branding
development and breakfast," Smith added.
The company said it expects to have 15 to 20 fewer Wendy's
restaurants and 50 to 60 fewer Arby's restaurants by the end of
2009, due to fewer-than-expected franchise openings and more
franchise closings because of the recession.
It reiterated that it expects to achieve growth in annual
adjusted earnings before interest, taxes, depreciation and
amortization in the mid-teens through 2011.
Wendy's/Arby's shares rose 15 cents, or about 2.7 percent,
to $4.90 on the New York Stock Exchange.
(Reporting by Ben Klayman, editing by Gerald E. McCormick and