NEW YORK (AP) -- Wendy's Co. said Monday that a key measure of earnings dropped 30 percent in the fourth quarter as it put its Arby's affiliation behind it. Its revenue jumped almost 6 percent
The fast-food chain boosted prices and still attracted more customers who spent more on each visit. Wendy's also got a lift from its premium cheeseburger, Dave's Hot 'N Juicy, which it launched in the fall.
Wendy's income from continuing operations fell to $4.3 million in the last three months of the year, down from $6.1 million in the fourth quarter of 2010.
However, that number does offer the company some vindication for its oft-repeated argument that Arby's was to blame for the dour results of the past few years. The $6.1 million profit a year ago was far better than the $10.8 million loss it originally reported for that period, when it was still bundling its results with Arby's.
2011 was a transition year for the restaurant, and not just because it sold Arby's in July. It's also been undertaking a much broader remodeling effort to bring back customers who thought its menu had grown stale or who had opted instead for "fast casual" burger chains like Five Guys and Smashburger. The company tapped a new CEO, is remodeling restaurants, and has introduced new salads, fries and desserts. After lagging behind other fast-food chains in international growth, it's now targeting markets like Japan and Russia.
Wendy's marriage with Arby's was short-lived. It began in the depths of the financial crisis in fall 2008 and ended this summer when Wendy's sold Arby's to a private-equity firm, saying it wanted to focus on the Wendy's brand instead. 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.
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. Brolick, who is scheduled to speak Monday to investors in New York, will likely field questions asking for more clarity on the company's turnaround plan as well questions about the company's relationship with its biggest shareholder, the investment firm of hedge fund magnate Nelson Peltz.
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 the costs for selling Arby's and writing down the value of some of its assets. With those charges, per-share earnings would have been 1 cent per share.
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, according to the company. That's a key measure of a company's health because it strips out the effect of newly opened or closed stores.
The higher revenue also helped Wendy's increase its profit margin to 15 percent from 14 percent at company-owned restaurants. It also said it was helped by "favorable insurance adjustments," but declined to give details. And like other restaurants, it's still facing higher costs for some of its ingredients, including beef.
Last week, Barclays Capital analyst Jeffrey Bernstein spoke favorably of the changes at Wendy's, listing the stock as a buy and saying that it was trading at a discount compared to other fast-food companies. Sanford C. Bernstein analyst Sara Senatore said Monday that revenue numbers beat her expectations. But she also said that the company's guidance for the year — it said it's expecting a low single-digit increase in a key measure called adjusted earnings before interest, taxes, depreciation and amortization — was below Wall Street's estimates of 7 percent growth.
Its shares fell 13 cents, or 2.5 percent, to $5.08 in morning trading.
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