At Wendy's® company operated restaurants in the United States, same- store sales for the third quarter increased 1.5%, versus a 2.8% increase a year ago.
Chairman and Chief Executive Officer Jack Schuessler said: "Same-store sales at Wendy's increased 2.2% for the first 10 weeks of the third quarter. Following the tragic events of September 11, consumer traffic slowed at Wendy's, especially in the Northeast and Southeast. Some of our restaurants were closed in New York City and other selected markets related to the tragedy. As a result, same-store sales were flat in September. Sales trends are improving and we are encouraged with positive same-store sales at Wendy's during the first week of October.''
At Tim Hortons® restaurants in Canada, same-store sales were up about 6.4% for the third quarter, versus an 8.9% increase a year ago, and sales grew by 6.1% in September.
At Tim Hortons restaurants in the U.S., same-store sales increased about 6.5% for the third quarter and 8.9% in September.
"Tim Hortons continues to produce excellent results,'' said Schuessler. "We are very pleased with the performance and the growing contribution that Tim Hortons provides for our Company.''
Company updates earnings guidance for the 3rd quarter, YTD and 2001
Management expects to report third quarter net income of about $52 million, up 8% compared to a year ago, and $0.44 per share on a diluted basis, a 7.5% increase over $0.41 reported a year ago. Through the third quarter, net income on a year-to-date basis is expected to be $147 million, and $1.24 per share, up 9% over a year ago.
"We delivered another good quarter in a difficult economic environment,'' said Schuessler. "Our management team, employees and franchisees are focused on strategies to:
• Grow sales at both brands with an emphasis on quality products and service.
• Open new Wendy's and Tim Hortons restaurants on a pace to meet our targets.
• Control costs throughout the organization.
Manage and utilize our very strong balance sheet."
Several items affected performance during the quarter including lower than expected sales growth at Wendy's following the events on September 11, weakening economic conditions and competitive discounting. Earnings were affected by negative foreign currency translation in Canada and high costs for beef versus a year ago. The company repurchased 440,000 common shares during the quarter for $12 million.
For the full year 2001, the company expects to produce diluted earnings per share in the $1.64 to $1.67 range, a 7% to 9% increase over a year ago. Diluted EPS for the year 2000 was $1.44; excluding international charges of $0.09, EPS was $1.53.
The company plans to publish its third quarter results on November 1. Management will host a 4:00 p.m. (Eastern time) conference call and web cast that same day.
Management is optimistic about plans for the 4th quarter and 2002
Wendy's continues to focus on its long-term strategy of operational excellence in its restaurants.
"The company and our franchisees are making progress with our Service Excellence® initiatives,'' said Tom Mueller, president and chief operating officer of Wendy's North America. "QSR magazine recently rated Wendy's No. 1 in its annual Drive-Thru Time Study. The study evaluates the top 25 quick- service restaurant chains for speed, order accuracy, menu board appearance and speaker clarity.''
Wendy's will leverage two national advertising campaigns during the fourth quarter of 2001 featuring promotional products. The first promotion is the Bacon Mushroom Melt(TM) hamburger, which began last week and will continue throughout October. In addition, Wendy's will run two Kids' Meal promotions during the quarter.
Tim Hortons will feature product promotions in the fourth quarter, including a soup and bagel combination meal and the new chili in a bread bowl.
The Company has solid plans in place at Wendy's for 2002. The system of more than 5,800 company and franchised Wendy's stores will continue to focus on Service Excellence®, the Late Night program, quality products and a powerful advertising calendar.
"Wendy's franchisees voluntarily increased national advertising spending to 3% of restaurant sales for 2002, up from 2.5%,'' said Mueller. "Total national advertising spending for 2002 will increase about 30% and we are adding an eighth national advertising campaign.
"For the first time ever we will have a year-long Hispanic television advertising campaign to appeal to this growing population segment, as well as increased advertising for our hamburger and Late Night programs,'' Mueller said.
Additionally, the company recently completed a new systemwide beef strategy that will result in a more efficient purchasing and distribution process. The strategy is expected to eliminate spikes in pricing and further improve food safety.
Management has postponed its 2001 Analyst and Investor Meeting, which was originally scheduled for September 24-25 in Canada. As previously announced, the meeting was postponed due to the events of September 11.
The company plans to reschedule the meeting in 2002 and will announce details at a later date.
Wendy's International, Inc. is one of the world's largest restaurant operating and franchising companies, with $7.7 billion in 2000 systemwide sales and two quality brands - Wendy's and Tim Hortons. Wendy's Old Fashioned Hamburgers® was founded in 1969 by Dave Thomas and is the third largest quick-service hamburger chain in the world with nearly 6,000 restaurants in the United States, Canada and international markets. Tim Hortons was founded in 1964 by Tim Horton and Ron Joyce and is the largest coffee and fresh baked goods chain in Canada. There are more than 2,000 Tim Hortons restaurants of which more than 1,900 are in Canada.
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