Wendy's/Arby's posts loss; Arby's weakness hurts
By Jessica Wohl and Lisa Baertlein
CHICAGO/LOS ANGELES (Reuters) - Wendy's/Arby's Group Inc WEN.N, the third-largest U.S. fast-food chain, posted a quarterly loss of nearly $400 million on Monday, hurt by impairment charges and falling sales at Arby's sandwich restaurants.
Shares of Wendy's/Arby's, which was formed last fall, rose 2 percent in midday trading after the company also outlined plans to improve performance at its lagging Arby's chain.
The company said fourth-quarter sales at established North American restaurants rose 3.7 percent at Wendy's, but fell 8.5 percent at Arby's -- which has introduced lower-priced sandwiches rather than discount its premium-priced roast beef sandwiches amid intense price competition.
"Arby's clearly needs to hit a home-run to stabilize (same-store sales) declines that are reaching double digits," UBS Equity Research analyst David Palmer wrote in a client note.
Wendy's/Arby's posted a fourth-quarter net loss of $393.2 million, or 84 cents per share, in the company's first financial report of combined results.
The results included $417.9 million, or 89 cents per share, in after-tax charges for writing down the goodwill of Arby's company-owned store operations and for an allowance for doubtful collection for a promissory note received in connection with the company's 2007 sale of Deerfield & Co LLC.
Excluding items, the company earned 5 cents per share, matching the analysts' average forecast, according to Reuters Estimates. Revenue was $896.5 million.
WORKING ON BOTH BRANDS Continued...