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Wendy’s posts strong earnings despite flat sales

DUBLIN Ohio Wendy’s International Inc. said its profit for the fourth quarter ended Dec. 30 quadrupled to $14.1 million, or 16 cents a share, from the prior-year period, when results included charges from the spinoff of Tim Hortons and Baja Fresh Mexican Grill. Still, profits fell short of analysts’ consensus forecast of 23 cents per share.

The profit increase came despite virtually flat revenues of $596 million, compared with $596.4 million in the year-ago period. Officials attributed the earnings gains to better store-level margins that reflected tighter cost controls.

During the fourth quarter of fiscal 2006, net income amounted to $3 million, or 3 cents a share. Discounting the charges for the sale of its two fast-casual chains, Wendy’s earned $9.9 million, or 9 cents a share, in the period.

During the most recent quarter, profit margins at U.S. company-owned units rose to 10.1 percent, despite higher commodity costs, the company said. Profit margins for fiscal 2006 were 8.9 percent.

For the full year, Wendy’s reported net income of $87.9 million, or 97 cents a share, compared with $94.3 million, or 82 cents a share, in 2006. With charges or gains discounted, Wendy’s earned $108 million, or $1.20 per share, in fiscal 2007, up from $72 million, or 62 cents a share, in fiscal 2006.

Same-store sales rose 0.9 percent for domestic company stores last year and 1.9 percent for franchised units, compared with increases of 0.8 percent for company units and .06 percent for franchised ones the prior year.

Wendy’s posted its results after alerting investors last week that a special committee of the company’ s board was close to concluding its review of ways to boost shareholder value, which could include a sale of the company.

“Our objective in 2008 is to reignite sales growth and drive quality and innovation throughout our business,” Kerrii Anderson, Wendy's chief executive, said in a statement. She promised a strong new product lineup, a re-energized focus on restaurant operations and an improved advertising campaign.

Jay Fitzsimmons, chief financial officer, said the company hopes to offset increasing commodity costs by raising menu prices and cutting costs.

In early trading on Monday, shares fell 81 cents to $24.37.

TAGS: Finance News
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