Wendy's profit drops; seeking strategic options

by FoodBusinessNews.net Staff
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DUBLIN, OHIO — Wendy’s International Inc. posted net income of $14,687,000 for the first quarter ended April 1, down 71% from $51,232,000 during the same quarter of the previous year.

Total revenue during the quarter was $590,164,000, which was a 2% increase compared with revenue of $578,678,000 during the same quarter of the previous year.

The company also is forming a special committee of independent directors who will review strategic options in an effort to enhance shareholder value. The possibilities may include changes to the company’s strategic plan, changes in capital structure, or a possible sale, merger or similar business combination.

James V. Pickett, chairman of the board, will head up the committee.

"There is no specific timeframe to complete the review, and there are no constraints on options to be explored by the committee," Mr. Pickett said. "A number of stakeholders have offered suggestions about strategies to improve performance and create additional value. The special committee will review strategic options while management continues to focus on executing Wendy’s current strategic plan to revitalize the brand and improve results at every restaurant in the system."

During the first quarter, three new company-owned restaurants and eight franchise restaurants were opened. The number of total system-wide restaurants at the end of the quarter was 6,658, which compared with 6,673 at the end of 2006 and 6,745 at the end of the first quarter of 2006.

The company repurchased 9 million shares during the first quarter. Same-store sales increased 3.8% for U.S. company-owned restaurant and 3.7% for U.S. franchise restaurants.

Wendy’s also anticipates that rising commodity prices resulting from ethanol demands will lead to higher foods costs for the rest of the year. The company believes this will specifically affect produce and chicken.

"We are working on many initiatives to offset rising costs, as we focus on improving margins at every restaurant in the Wendy’s system," said Kerrii Anderson, chief executive officer. "We are confident our initiatives to drive sales, reduce store-level management labor and improve service times will result in profit growth in the second half."

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