MCD McDonalds Corp

By Joshua Jamerson 

Wendy's Co. reported fourth-quarter profit that beat expectations as it continues to see benefits from operating fewer of its restaurants itself.

The company also said it expects same-restaurant sales growth for the current year above what analysts were expecting.

Wendy's said it sees same-store sales growth in 2016 of about 3% in North America, above the projection of 2.5% by analysts surveyed by Consensus Metrix. The company also projected adjusted per-share earnings between 35 cents and 37 cents, in-line with the consensus view of 36 cents by analysts polled by Thomson Reuters.

Like many other restaurant chains, including McDonald's Corp. and Burger King, a unit of Restaurant Brands International Inc., Wendy's has sought a more stable cash flow and higher profits by selling its company-owned restaurants to franchisees. Wendy's cited its reduced ownership of restaurants as a reason for its higher results in the quarter, and said it plans to sell about 315 more restaurants during 2016.

Wendy's said same-restaurant sales at North American restaurants rose 4.8% in the quarter and 4.9% at its franchise-operated locations. The Consensus Metrix projection was for 3.1% growth at franchised restaurants.

Wendy's had moved from having 78% of its restaurants owned by franchisees to 85%, and plans to have 95% of its restaurants franchised this year.

The company also said its leadership succession plan was proceeding as planned. Chief Executive Emil Brolick plans to retire in May, with Chief Financial Officer Todd Penegor stepping into the role. The company is conducting an external search for a new finance chief to replace Mr. Penegor.

Over all, Wendy's posted earnings of $85.9 million, or 31 cents a share, compared with a year-earlier profit of $23.3 million, or 6 cents a share. Excluding certain items, earnings from continuing operations were 12 cents a share, up from 8 cents a year ago.

Analysts, on average, had expected 11 cents a share, according to Thomson Reuters.

Revenue slipped 4.7% to $464.4 million, largely because of the ownership of 363 fewer company-operated restaurants in the period. Analysts had forecast $456 million in revenue.

Rival McDonald's, whose turnaround has shown progress recently, found success with its all-day breakfast menu in its most recently-ended quarter. The company in January reported better-than-expected earnings and same-store sales, buoyed by the breakfast initiative.

As McDonald's hit its stride with all-day breakfast, Wendy's, which had struggled to find a value offering that would appeal to customers, has seen its results helped in recent quarters by its "4 for $4" deal, which includes a Jr. Bacon Cheeseburger, chicken nuggets, fries and drink.

The company has said the deal is driving customers to its restaurants and that it has been very profitable.

Wendy's, which reported that it repurchased nearly 100 million of its shares for $1.1 billion in 2015, said it expects to file its audited results by March 3.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

February 09, 2016 09:10 ET (14:10 GMT)

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