Wendy’s, Arby’s post losses in first report as sister brands

ATLANTA Wendy’s/Arby’s Group Inc., the newly formed parent of the Wendy’s and Arby’s fast-food brands, said Thursday that both businesses swung to third-quarter losses because of slowed sales and charges stemming from Arby’s acquisition of Wendy’s.

The company did not report combined results because the $2.3 billion acquisition — where Arby’s parent Triarc Cos. Inc. acquired Wendy’s International Inc. in a stock swap— closed in the final days of the quarter. Activist investor Nelson Peltz led Triarc’s quest to purchase the No. 3 burger brand and now serves on Wendy’s/Arby’s board of directors. His investment funds, managed through Trian Partners, also hold a significant stake in the new company.

Wendy’s posted a net loss of $29.9 million, or 34 cents per share, versus profit of $29.9 million, or 34 cents per share, a year ago. In the latest quarter Wendy’s booked a charge of $69 million for costs associated with its takeover by Triarc.

Wendy’s revenues fell less than one percent to $624.9 million from year-ago revenues of $629.8 million. Total sales at corporate Wendy’s restaurants fell 1.2 percent to $548.1 million, which reflected a same-store sales decrease of 0.2 percent. The company noted, however, that same-store sales have improved following the third quarter and rose 2.1 percent in September and 5 percent in October. Those results occurred as Wendy’s marketed its 99-cent sandwiches, including the Double Stack.

Wendy’s officials have said the chain will continue to focus on value offerings as consumers continue to spend less amid the economic turmoil. But they have also indicated that the franchisor’s revamped management team will attempt to turn around Wendy’s lackluster performance with a focus on quality – a brand attribute that harkens back to founder Dave Thomas.

At Arby’s, the net loss for former parent Triarc totaled $12.1 million, or 13 cents per share, and included impairment charges of $14.1 million for assets held for sale and for underperforming restaurants. A year ago, Triarc posted a profit of $3.7 million, or 4 cents per share.

Latest-quarter revenues fell 4.3 percent to $310.4 million. Same-store sales fell 7.2 percent at corporate restaurants and 4 percent at franchised Arby’s locations. The company blamed discounting tactics used by competitors.

Separately, Peltz’s Trian Partners said it would begin a partial tender offer to purchase up to 40 million shares of Wendy’s/Arby’s Group stock for $4.15 per share – a 26-percent premium to the company’s stock price of $3.29 on Wednesday. Prior to the offer, Trian owned about 11 percent of Wendy’s/Arby’s stock. If the tender offer is completed as planned, Trian would hold a nearly 20-percent stake.