NEW YORK (AP) — Wendy's Co. said Monday that a key measure of earnings dropped 30 percent in the fourth quarter, as charges for selling Arby's offset the effects of a jump in revenue.
More visitors, who spent more on each visit, helped push revenue up 5.6 percent. So did higher prices. The company also credited the remake of its premium cheeseburger, Dave's Hot 'N Juicy, during the fall.
But Wendy's has also been undertaking a much broader remodeling effort. In the past couple of years, it's tried to work over its entire menu, introducing new salads, fries and desserts to attract customers who thought the menu had grown stale. It's expanding into breakfast again after a failed attempt a few years ago. It's growing internationally and just opened a restaurant in Japan, a change from its previous focus on domestic operations. It's also remodeling restaurants.
Income from continuing operations fell to $4.3 million in the last three months of the year, down from $6.1 million a year ago. The company didn't report what net income was on the basis that's usually reported in regulatory filings. Wendy's said it would report full results on March 1, but didn't give the reason for that decision.
On a per-share basis, adjusted earnings were 4 cents, in line with the expectations of analysts polled by FactSet. That number excluded one-time charges like costs for selling Arby's over the summer and writing down the value of some of its assets. However, Wendy's did report that its per-share earnings would have been 1 cent if the one-time charges were included.
Revenue climbed to $615 million from $582.6 million a year earlier. The latest figure narrowly beat the $613 million predicted by analysts.
Revenue at restaurants open at least a year climbed 4.4 percent in North America, the highest number in nearly 8 years. That's a key measure of a company's health because it strips out the effect of newly opened or closed stores.
Its shares fell 11 cents, or 2.1 percent, to $5.10 in morning trading.
Emil Brolick, who became CEO in September, said the company is "making progress on re-establishing Wendy's as the quality leader and innovator" in fast food. He's spoken before about how he's keenly aware of growing competition from fast-casual burger chains like Five Guys and Smashburger, and his goal is to attract customers who want a higher-end fast food.
Wendy's managed to increase its profit margin to 15 percent from 14 percent, thanks to the revenue increases. However, like other restaurants, it's still facing higher costs for some of its ingredients, including beef.
The chain is also still feeling the effects of its combination with Arby's. The marriage was short-lived, beginning in the depths of the financial crisis in fall 2008 and ending this summer when Wendy's sold Arby's to a private-equity firm, saying it wanted to focus on the Wendy's brand. Since then, it's installed Brolick, a Yum Brands veteran, as CEO, and moved its headquarters back to Dublin, Ohio, from Arby's home base in Atlanta. Wendy's said Monday it spent nearly $46 million over 2011 to break up with Arby's, including severance costs for some employees and retention bonuses for others.
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