Wendy’s announced preliminary same-store sales results for the March sales period, which ended on Sunday, April 3.
Same-store sales increased 3.2% to 3.4% at Tim Hortons restaurants in Canada and 5.5% in the United States. Same-store sales decreased 5.1% at Wendy’s U.S. Company restaurants and decreased 3.9% to 4.2% at Wendy’s U.S. franchised restaurants.
Both Wendy’s and Tim Hortons’ sales in the back half of the month reflect this year’s shift of the Easter holiday into March. In addition, Wendy’s sales were impacted by inclement weather in various parts of the United States.
“Tim Hortons continues to deliver strong sales throughout North America, especially considering the extremely strong results a year ago in both Canada and the United States,” said Chairman and Chief Executive Officer Jack Schuessler.
Tim Hortons in March featured its annual “Roll Up the Rim to Win” contest, which offers customers a chance to win prizes with the purchase of a hot beverage. In April Tim Hortons will promote its new Toasted Chicken Club combo.
“Wendy’s February and March sales comparisons were the most challenging we will face during 2005, as comps will begin easing late in the second quarter,” Schuessler said.
Wendy’s promoted its new Fresh Fruit Bowl and Cup in February and March. In late March, Wendy’s began local advertising for its Mozzarella Cheeseburger and Mozzarella Chicken Supreme Sandwich. In late April, Wendy’s will begin promoting its new Mediterranean Chicken Salad.
Company expects stronger second half performance
As previously announced, management expects second-half 2005 performance to be stronger than the first half. In the first two quarters of 2005, the Company has faced difficult sales comparisons, higher than expected beef costs, expenses associated with the rollout of Wendy’s double-sided grill and costs for Tim Hortons’ new distribution center in Canada.
Several factors will cause 2005 first-quarter earnings per share (EPS) to be lower than the prior year’s restated first-quarter results of $0.42. First quarter 2004 results were restated to include the impact of stock option expensing, which lowered EPS about $0.03. The Company had previously announced that it had decided to adopt SFAS 123R beginning with the first quarter of 2005 and that it would restate prior years to provide comparable results.
Factors affecting first quarter 2005 results include:
– The shift of Easter into the first quarter of 2005, which had a negative impact of approximately 1.5% on Wendy’s March same-store sales and about $0.005 per share for the quarter.
– Beef prices of $1.42 per pound, versus $1.34 last year, which will have a negative impact of about $0.01 per share for the quarter.
– The expensing of restricted stock, which the Company began in July 2004. This will have a negative impact of about $0.01 per share for the quarter.
For the second quarter of 2005, the Company anticipates beef prices of approximately $1.52 per pound, versus $1.23 last year, which is higher than previously expected.
The Company affirmed its 2005 growth guidance of $2.17 to $2.23 per share.
Murdok | Breaking eBusiness News
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