Wendy's U.S. Same-Store Sales Dip
Wendy's International, Inc. Announces Fourth-Quarter Sales; Tim Hortons Posts Strong Results in Canada and United States
Progress on strategic initiatives continues
-- Key steps under way to improve the Company's performance
-- Management will discuss update to comprehensive plan during Analyst and Investor meeting on February 6
Wendy's International, Inc. (NYSE:WEN) today announced its fourth quarter same-store sales and provided an update on continued progress with its strategic initiatives.
Fourth-quarter sales
The Company announced preliminary same-store sales results for the fourth quarter, which ended on Sunday, January 1, 2006:
-- Tim Hortons(R) fourth-quarter same-store sales increased 5.8% at restaurants in Canada and 6.7% in the United States.
-- Wendy's(R) same-store sales decreased 2.9% at U.S. company stores and 1.9% at U.S. franchised restaurants.
-- Baja Fresh(R) Mexican Grill's system same-store sales declined 2.9%.
Tim Hortons introduced during the fourth quarter its new Hot Smoothee, a hot beverage available in five flavors: Butter Caramel, French Vanilla, Hazelnut, Orange and Raspberry. Tim Hortons also promoted its Hearty Vegetable Soup and Turkey Sandwich combo in October, Southwest Chicken Sandwich combo in November, and Holiday merchandise in December. The January promotions are Yogurt and Berries (in Canada) and a Coffee and Bagel combo (in the U.S.).
Wendy's began new national marketing for its Super Value Menu(TM) on December 28. The menu will feature a Junior Bacon Cheeseburger, Yogurt and Granola, and several other items at 99 cents. The menu will also include a new 99-cent junior barbeque cheeseburger. In February, Wendy's will test its new jalapeno double-melt hamburgers and a 99-cent chicken sandwich.
Fourth-Quarter Same-Store Sales Summary
Strategic Initiatives Update
Over the past four months, the Company successfully completed several strategic initiatives. The Company announced these initiatives on July 29, 2005.
"We have a comprehensive plan to deliver value for shareholders today, tomorrow and longer term, and we are executing it," said Chairman and CEO Jack Schuessler. "Our strategic initiatives are right on track with our original timeline.
"We are committed to improving the results of our Wendy's brand," continued Schuessler. "While we are focused on improving sales, our brand remains one of the strongest in the quick-service restaurant industry with average unit sales at company restaurants of more than $1.35 million. That is one of the highest AUVs in the industry."
The strategic initiatives include the following:
• August 16 - Share Repurchase: Completed a two million-share, $98 million accelerated share repurchase (ASR) program.
• December 1 - Tim Hortons IPO: Filed a Form S-1 registration statement with the United States Securities and Exchange Commission for a 15 to 18 percent initial public offering (IPO) of Tim Hortons Inc. The Company plans to list Tim Hortons shares on the New York Stock Exchange and the Toronto Stock Exchange. The trading symbol will be THI. Assuming a successful IPO for Tim Hortons in March, the Company anticipates that a spin-off would occur as soon as practical, which is expected to be within 9 to 18 months, depending on market conditions. "We are focused on completing the IPO in order to establish a trading value for Tim Hortons in 2006," said Schuessler. "We are committed to a seamless transition for Tim Hortons to become a standalone company, while preserving a tax-efficient transaction for Wendy's shareholders. "Assuming a spin-off occurs, we recognize that Wendy's will be a different company," said Schuessler. "We are already evolving our comprehensive plan and will discuss this more during our investor meeting on February 6."
• December 15 - Debt Repayment: Paid off $100 million in 6.35% notes.
• Second half of 2005 - Sale of Real Estate: Sold approximately 175 real estate properties to franchisees and third parties, which resulted in a pretax gain of approximately $64 million and approximately $169 million in cash proceeds. These gains will be offset by goodwill impairment, asset impairment and store closing charges of approximately $80 to $95 million in the fourth quarter.
• Fourth quarter of 2005 - Closed Underperforming Stores: Closed more than 40 underperforming Wendy's restaurants that were negatively impacting profits and returns.
• December 29 - Share Repurchase: Completed a 3.75 million-share, $207 million accelerated share repurchase.
• 2005 - Slowed New Restaurant Development: The Company slowed Wendy's new restaurant development in 2005.
• Future - Refranchising: The Company continues to anticipate the franchising of 250 to 450 Company-owned Wendy's stores over the next one to three years, which is expected to generate gains.
-- Key steps under way to improve the Company's performance
-- Management will discuss update to comprehensive plan during Analyst and Investor meeting on February 6
Wendy's International, Inc. (NYSE:WEN) today announced its fourth quarter same-store sales and provided an update on continued progress with its strategic initiatives.
Fourth-quarter sales
The Company announced preliminary same-store sales results for the fourth quarter, which ended on Sunday, January 1, 2006:
-- Tim Hortons(R) fourth-quarter same-store sales increased 5.8% at restaurants in Canada and 6.7% in the United States.
-- Wendy's(R) same-store sales decreased 2.9% at U.S. company stores and 1.9% at U.S. franchised restaurants.
-- Baja Fresh(R) Mexican Grill's system same-store sales declined 2.9%.
Tim Hortons introduced during the fourth quarter its new Hot Smoothee, a hot beverage available in five flavors: Butter Caramel, French Vanilla, Hazelnut, Orange and Raspberry. Tim Hortons also promoted its Hearty Vegetable Soup and Turkey Sandwich combo in October, Southwest Chicken Sandwich combo in November, and Holiday merchandise in December. The January promotions are Yogurt and Berries (in Canada) and a Coffee and Bagel combo (in the U.S.).
Wendy's began new national marketing for its Super Value Menu(TM) on December 28. The menu will feature a Junior Bacon Cheeseburger, Yogurt and Granola, and several other items at 99 cents. The menu will also include a new 99-cent junior barbeque cheeseburger. In February, Wendy's will test its new jalapeno double-melt hamburgers and a 99-cent chicken sandwich.
Fourth-Quarter Same-Store Sales Summary
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4Q 2005 4Q 2004 2005 YTD
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Wendy's U.S. Company -2.9% -4.3% -3.7%
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Wendy's U.S. Franchise -1.9% -4.0% -3.1%
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Tim Hortons Canada 5.8% 6.6% 5.2%
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Tim Hortons U.S. 6.7% 9.1% 7.0%
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Baja Fresh System -2.9% -6.1% -3.7%
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Strategic Initiatives Update
Over the past four months, the Company successfully completed several strategic initiatives. The Company announced these initiatives on July 29, 2005.
"We have a comprehensive plan to deliver value for shareholders today, tomorrow and longer term, and we are executing it," said Chairman and CEO Jack Schuessler. "Our strategic initiatives are right on track with our original timeline.
"We are committed to improving the results of our Wendy's brand," continued Schuessler. "While we are focused on improving sales, our brand remains one of the strongest in the quick-service restaurant industry with average unit sales at company restaurants of more than $1.35 million. That is one of the highest AUVs in the industry."
The strategic initiatives include the following:
• August 16 - Share Repurchase: Completed a two million-share, $98 million accelerated share repurchase (ASR) program.
• December 1 - Tim Hortons IPO: Filed a Form S-1 registration statement with the United States Securities and Exchange Commission for a 15 to 18 percent initial public offering (IPO) of Tim Hortons Inc. The Company plans to list Tim Hortons shares on the New York Stock Exchange and the Toronto Stock Exchange. The trading symbol will be THI. Assuming a successful IPO for Tim Hortons in March, the Company anticipates that a spin-off would occur as soon as practical, which is expected to be within 9 to 18 months, depending on market conditions. "We are focused on completing the IPO in order to establish a trading value for Tim Hortons in 2006," said Schuessler. "We are committed to a seamless transition for Tim Hortons to become a standalone company, while preserving a tax-efficient transaction for Wendy's shareholders. "Assuming a spin-off occurs, we recognize that Wendy's will be a different company," said Schuessler. "We are already evolving our comprehensive plan and will discuss this more during our investor meeting on February 6."
• December 15 - Debt Repayment: Paid off $100 million in 6.35% notes.
• Second half of 2005 - Sale of Real Estate: Sold approximately 175 real estate properties to franchisees and third parties, which resulted in a pretax gain of approximately $64 million and approximately $169 million in cash proceeds. These gains will be offset by goodwill impairment, asset impairment and store closing charges of approximately $80 to $95 million in the fourth quarter.
• Fourth quarter of 2005 - Closed Underperforming Stores: Closed more than 40 underperforming Wendy's restaurants that were negatively impacting profits and returns.
• December 29 - Share Repurchase: Completed a 3.75 million-share, $207 million accelerated share repurchase.
• 2005 - Slowed New Restaurant Development: The Company slowed Wendy's new restaurant development in 2005.
• Future - Refranchising: The Company continues to anticipate the franchising of 250 to 450 Company-owned Wendy's stores over the next one to three years, which is expected to generate gains.
