Wendy's International, Inc. (NYSE: WEN) announced on Friday positive sales in November for both its Wendy's® and Tim Hortons® brands.
=During period 11, which ended on December 1, 2002:
a. Same-store sales increased 1.0% at Wendy's U.S. company restaurants and 2.5% at franchised restaurants.
b. Same-store sales increased 4.2% at Tim Hortons restaurants in Canada and 4.7% at Tim Hortons restaurants in the U.S.
Chairman and Chief Executive Officer Jack Schuessler said: "Our operators and franchisees delivered another solid sales performance in a challenging environment. We focused on further improving our restaurant operations and serving quality products, while our competitors resorted to discounting as a tactic."
As for the practices of competitors, Schuessler said, “We have no intention of discounting."
The company is tightening its 2002 EPS growth goal to a range of $1.88 to $1.90, a 14% to 15% increase over $1.65 in 2001. Previous guidance was 15% to 16%. The company's long-term goal for annual EPS growth continues to be in the 12% to 15% range.
"Our sales growth at Wendy's and Tim Hortons this year has been very robust, our new unit development is on track and our earnings performance has been outstanding," said Chief Financial Officer Kerrii Anderson. "We are bullish about our strategic plan and growth prospects.”
Short-term challenges affecting the guidance restatement include discounting of premium products by quick-service hamburger competitors, weak economic conditions in the U.S. and significantly worse weather in October, November and the first week of December versus a year ago.
Management expects dilution in 2002 from Baja Fresh® Mexican Grill to be at the high end of its $0.02 to $0.04 per share guidance. The company acquired Baja Fresh in June 2002 and the fast-casual restaurant business is profitable. The dilution is the result of interest payments on $225 million of 6.2% senior notes issued to pay for the acquisition, as well as integration costs and amortization of acquisition-related intangibles.
The company also announced today that Cafe ExpressT recently completed a strategic business plan and decided to close its Phoenix, Ariz., restaurant. The impact of the closing and operating losses at the Phoenix location is expected to cost Wendy's about one-third of a penny in earnings during the fourth quarter. Wendy's invested $9 million in Cafe Express during 2002 and owns 45 percent of the fast-casual restaurant chain, which has 13 units in Texas.
Wendy’s also announced that during the fourth quarter through December 3, the company repurchased 482,000 common shares for $14 million. Year-to-date, the company has repurchased 1.2 million shares for $38.7 million.