Wendy's International, Inc.

Wendy's International, Inc.

October 05, 2005 07:59 ET

Wendy's International, Inc. Announces 2005 Third Quarter Same-Store Sales

DUBLIN, Ohio--(CCNMatthews - Oct 5, 2005) -

Wendy's International, Inc. (NYSE:WEN) today announced preliminary same-store sales results for the third quarter, which ended on Sunday, Oct. 2.

-- Tim Hortons® third quarter same-store sales increased 3.6% to 3.7% at restaurants in Canada and 4.7% in the United States, compared to very strong sales in the quarter a year ago.

-- Wendy's® same-store sales decreased 5.0% at U.S. company stores and 5.5% to 5.7% at U.S. franchised restaurants, compared to positive sales in the quarter a year ago.

-- Baja Fresh® Mexican Grill's system same-store sales declined 4.1%.

"Sales at all brands were impacted by record high gasoline prices and lower consumer spending levels, and store closings from hurricanes Katrina and Rita impacted Wendy's restaurants during the period," said Chairman and CEO Jack Schuessler. "We are not pleased with our Wendy's and Baja Fresh sales trends, and everyone in the organization is focused on improving results."

Third-Quarter Same-Store Sales Summary

3Q 2005 3Q 2004 2005 YTD
Wendy's U.S. Company (5.0%) 2.0% (3.9%)
Wendy's U.S. Franchise (5.5% to 5.7%) 0.9% (3.5%)
Tim Hortons Canada 3.6% to 3.7% 8.4% 5.0%
Tim Hortons U.S. 4.7% 9.8% 7.0%
Baja Fresh System (4.1%) (7.5%) (3.9%)

Tim Hortons continues to innovate with products; Company working on IPO

During the third quarter, Tim Hortons featured fresh-baked cookies in July, cinnamon rolls in August and steeped tea (in Canada) and chocolate-themed desserts (in the U.S.) in September. In October, Tim Hortons is promoting its hearty vegetable soup and turkey sandwich combo; its donut of the month is pumpkin spice.

Management is working on the elements of Tim Hortons initial public offering (IPO), which was announced in late July. The Company plans to file an S-1 registration statement in early December and continues to target March 2006 for the Tim Hortons IPO.

Wendy's sales hurt by hurricanes

Wendy's third-quarter sales were affected by hurricanes Katrina and Rita, which resulted in the loss of 2,676 full store days (1,460 company and 1,216 franchise) through the end of the third quarter, as well as a number of partial store days. As of Oct. 2, 26 company and 21 franchised Wendy's in Louisiana, Mississippi and Texas had not re-opened.

The Company's preliminary estimate is that the hurricanes negatively impacted third-quarter earnings by $0.02 per share due to:

-- Lost sales and royalties in the affected region.

-- Increased expenses for salary-continuation programs for displaced workers.

-- Costs for relief-effort donations in the areas affected by the hurricane.

-- Rent expense for closed stores.

"We are focused on reinvigorating Wendy's sales growth with a fanatical approach to execution in restaurant operations, marketing and research and development," said Schuessler. "We are also making progress on our strategic initiatives, including the sale of certain Wendy's real estate assets and initial steps in the process of closing of underperforming stores and refranchising certain company-owned stores."

Beginning in October, Wendy's will promote its Bacon Mushroom Melt Cheeseburger as part of its platform marketing strategy, which includes Internet advertising along with traditional television, radio, print and in-store marketing.

Company faced other costs in the Third Quarter

As previously announced, the Company's 2005 third-quarter beef costs were an all-time high $1.55 per pound, up 18% compared to $1.31 in the third quarter of last year. Higher beef costs are expected to have a $0.02 negative impact on third-quarter earnings per share.

Beef prices will improve in the fourth quarter to $1.39 per pound, down 10.3% from the 2005 third-quarter price, and down $0.01 per pound from $1.40 per pound during the fourth quarter a year ago.

Company continues to strengthen management team

The Company announced personnel changes in two key areas to strengthen its Wendy's management team and brand.

Robert Whittington recently joined the Company as Senior Vice President and Chief Information Officer. Whittington comes to Wendy's from Sun Microsystems, where he was Retail Vertical Technology Officer. Prior to that, he was Vice President of Business Process Innovation Consulting for EDS. He also has external consulting experience from Ernst & Young / Cap Gemini, where his clients included The Fleming Companies, McDonald's, Albertsons, Walgreens, Sears, Dayton Hudson, and the United Kingdom government. Whittington has a B.A. from Wheaton College and an MBA from the University of Chicago. He will be moving to Columbus from Kansas City.

Whittington fills a vacancy created by the May 2005 promotion of John Deane, Wendy's Executive Vice President and CIO since 2002, to Executive Vice President of Wendy's North America Operations. During his tenure at Wendy's, Deane led a successful transformation of the Company's information technology group to a strategic, mobile force and oversaw key initiatives such as E-Pay, Store Budgeting and Store Automation. He has also championed change-management processes throughout the system to help meet changing consumer needs. Deane previously held senior management positions at MedPartners (now CareMark Rx, Inc.), Whirlpool Corp., and Price Waterhouse, and also founded his own technology services company, Clipper Management. Deane holds a B.S. degree in business from the Universidad Catolica Argentina in Buenos Aires, Argentina, and an MBA from Marquette University.

Third Quarter conference call and webcast scheduled for Oct. 27

The Company will release earnings and host a conference call at 4:00 p.m. on Thursday, Oct. 27 to discuss third-quarter results.

Investors may participate either via conference call at (877) 572-6014 (domestic) or (706) 679-4852 (international), or by live webcast at www.wendys-invest.com. A replay will also be available for 90 days on the site and for 10 days by telephone at (800) 642-1687 (conference ID No. 9867893).

Monthly Same-Store Sales Summary for July, August and September(a)

July July August August September September
2005 2004 2005 2004 2005 2004
-------------- ------------- ------------- ---------------------------
Wendy's U.S.
Company (5.4%) 3.9% (5.2%) 2.8% (4.3%) (1.4%)
-------------- ------------- ------------- ---------------------------
Wendy's U.S.
Franchise (5.2%) 2.1% (6.5%) 1.5% (4.7% to 5.0%) (1.0%)
-------------- ------------- ------------- ---------------------------
Tim Hortons
Canada 4.0% 8.2% 3.4% 9.6% 3.5% to 3.6% 7.5%
-------------- ------------- ------------- ---------------------------
Tim Hortons
U.S. 4.1% 11.0% 5.3% 10.4% 4.8% 7.7%
-------------- ------------- ------------- ---------------------------
(a) For the July, August and September sales periods ended Aug. 7,
Sept. 4, and Oct. 2, respectively.

Tim Hortons IPO

A registration statement relating to the common shares to be sold in the Tim Hortons IPO is expected to be filed with the Securities and Exchange Commission, but has not been filed or become effective. The common shares may not be sold and offers may not be accepted prior to the time the registration statement becomes effective.

This release does not constitute an offer to sell or the solicitation of any offer to buy, and there shall not be any sale of the common shares in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.

Wendy's International, Inc. overview

Wendy's International, Inc. is one of the world's largest restaurant operating and franchising companies with more than 9,800 total restaurants and quality brands - Wendy's Old Fashioned Hamburgers®, Tim Hortons and Baja Fresh Mexican Grill. The Company has investments in two other quality brands - Cafe Express™ and Pasta Pomodoro®. More information about the Company is available at www.wendys-invest.com.

Safe Harbor statement

Certain information in this news release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, is forward looking. Factors set forth in our Safe Harbor under the Private Securities Litigation Reform Act of 1995, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company's Safe Harbor statement at http://www.wendys-invest.com/safeharbor.

Cafe Express is a trademark of Cafe Express, LLC

Pasta Pomodoro is a registered trademark of Pasta Pomodoro, Inc.



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