001109 Wendy's Profit Up 9.3 Percent

Dublin, OH - Wendy's International Inc., which operates the No. 3 U.S. hamburger chain, said on Thursday third-quarter net income rose 9.3%, beating estimates, as the company posted moderate gains at its Wendy's restaurants.

The Dublin, Ohio-based company said net income rose to $48.6 million, or 41 cents a diluted share, from $44.5 million, or 35 cents, a year ago.

Wendy's was expected to earn 40 cents a share in the quarter, based on a recent poll of analysts by market research firm First Call/Thomson Financial.

Systemwide sales rose 8.9% to a record $2.0 billion. The company's revenues rose 8.5% to a record $578 million.

Comparable-store sales, or those at stores open at least one year at the company's U.S. Wendy's, rose 2.8% for the quarter and are up 3.0% in the year, the company said.

“Although Wendy's comps fell short of our expectations, they are still at or near the top of all national fast-food concepts at the present time,” Salomon Smith Barney analyst Mark Kalinowski said in a report published Thursday. He had expected same-store growth of 4%.

Wendy's faced stiff competition at the beginning of the quarter due to a special promotion at competitor Burger King Corp., Kalinowski said in an interview.

Tim Hortons, the dominant Canadian doughnut chain with 1,895 stores and recent expansion into the U.S., had quarterly same-store sales growth of 8.9% for Canadian stores and 11.1% for those in the United States.

“It was a balanced quarter with Wendy's performing well and Tim Hortons continuing to perform above our expectations,” the company's chief executive, Jack Schuessler, said in a statement.

The company is maintaining plans to add 285 new U.S. Wendy's to its existing 1,005 units this year.

Wendy's, which operates 685 international Wendy's restaurants, said sales weakness continues in Argentina, where its 18 units have suffered a year-to-date pretax operating loss of $3.2 million. The company said it is reviewing alternatives for its investment in the region.

In the quarter, the restaurant company bought back $6.3 million worth of its common stock, bringing its total repurchased since 1998 to $491 million.

Wendy's, known for its television commercials featuring founder Dave Thomas, said its earnings per share growth goal for 2000 continues to be in the 14 to 17% range, while its long-term growth goal remains 12% to 15%. Both forecasts exclude asset gains and unusual items.

“We could do better than the 14% to 17% for the year if the fourth quarter comes in on plan,” CEO Schuessler told analysts on a conference call Thursday. Wendy's is expected to earn $1.50 a share in the year, based on First Call/Thomson Financial's survey.

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