Wendy's International, Inc. (WEN), the third largest U.S. hamburger chain, said Tuesday after the markets closed that second quarter earnings fell from last year, hurt by declining sales and rising commodity costs as well as restructuring charges and expenses on a special committee formed a year ago to study strategic alternatives. The company's quarterly earnings per share, excluding items, also came in below analysts' expectations.
The Dublin, Ohio-based company reported net income for the second quarter of $19.9 million or $0.22 per share, compared to $29.2 million or $0.33 per share for the year-ago quarter.
Income from continuing operations for the second quarter was $19.9 million or $0.22 per share, compared to $29.3 million or $0.33 per share in the prior year quarter.
Excluding restructuring charges and special committee expenses, adjusted income from continuing operations for the second quarter was $26.1 million or $0.30 per share, compared to $35.9 million or $0.41 per share in the second quarter of last year.
Wendy's, which has agreed to be acquired by Triarc Companies Inc. (TRY), said total revenue for the second quarter declined 0.2% to $631.92 million from $632.91 million in the same quarter last year. Four analysts had a consensus revenue estimate of $626.68 million for the second quarter.
Company sales fell 0.4% to $556.1 million from $558.3 million a year ago, while franchisee revenue rose 1.7% to $75.8 million from $74.6 million last year. Last month, the company said second-quarter same-store sales at U.S. company-operated restaurants increased 0.1%, while same-store sales at U.S. franchise restaurants increased 1.1%.
The company said Tuesday that cost of sales increased to $345.4 million, or 62.1% of retail sales, in the second quarter from $337.2 million, or 60.4% of retail sales, in the second quarter of last year, due mainly to higher commodity costs and a decline in transactions.
Gross margin for the second quarter fell to 45.3% from 46.7% in the year-ago quarter.
The total number of system-wide Wendy's restaurants at the end of the second quarter was 6,625, compared to 6,661 a year ago.
Wendy's is currently testing several additions to its breakfast menu, including a new Mornin' Melt Panini, a premium breakfast sandwich that is grilled fresh on sourdough bread, and a new hand-crafted cinnamon roll served warm with vanilla icing.
In July, the company re-launched its premium salad lineup with national advertising, featuring the transition from cold chicken to a warm chicken fillet available in three varieties - Grilled, Homestyle, or Spicy - on its entree salads.
In April, Wendy's entered into a definitive merger agreement to be bought by Atlanta-based Triarc, the owner of Arby's, in an all stock deal in which Wendy's shareholders would receive a fixed ratio of 4.25 shares of Triarc Class A common stock for each Wendy's share held. The deal is expected to close in the second half of 2008.
Roland Smith, Triarc's Chief Executive Officer, would continue in that role for the combined company that will include the name Wendy's. The combined systems would have about 10,000 restaurants and pro forma annual system sales of about $12.5 billion.
Earlier Tuesday, Triarc reported a net loss for the second quarter of $6.9 million or $0.07 per share, compared to $28.0 million or $0.30 per share for the year-ago quarter. Loss for the latest quarter include a pre-tax investment loss of $9.2 million, due mainly to a decline in value of equity investments.
Triarc's revenues for the quarter fell to $313.0 million from $316.8 million in the prior year quarter that included $16.8 million fees from asset management business sold in December 2007. Same-store sales decreased 3.3% system wide.
Wendy's shares, which have traded in a range of $$22.12 to $35.14 over the past year, closed Tuesday' regular trading session at $24.20, up $1.21 or 5.26%.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.