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Franchisees beef up Wendy's sales

Wednesday, August 09, 2017 - 01:04

The burger chain swung to a quarterly loss, but its adjusted earnings and revenue beat Wall Street's estimates. Fred Katayama reports.

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Surging income from royalties and rentals to franchisees beefed up Wendy's quarterly results. And new offerings such as fresh mozzarella chicken salad helped boost sales at established restaurants in its biggest market, North America. The burger chain swung to a loss partly because it bought and sold some restaurants during the quarter. Its revenue declined because the company owned 251 fewer restaurants at the end of the quarter, resulting in lower sales. But its adjusted earnings and revenue beat Wall Street's estimates. Evercore ISI restaurant analyst Matthew McGinley said, "Very strong operating results in the quarter. Good comp, excellent increase in profit, great free cash flow conversion. They're checking all the boxes in their long-run plan in getting the system into better condition." Wendy's shares, which are outperforming the broader S&P 500 this year with a nearly 13 percent return, rose further at the market open Wednesday. The company was optimistic about the road ahead. It sees its same store sales rising up to 3 percent in North America this year, with adjusted earnings increasing 13 to 18 percent.

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Franchisees beef up Wendy's sales

Wednesday, August 09, 2017 - 01:04