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Wendy's Lowers Guidance

The restaurant chain cites an adverse legal ruling.
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Updated from 9:18 a.m.

Wendy's International


Wednesday issued lower fourth-quarter and full-year guidance, while reporting a decline in same-store sales for December.

The Ohio-based restaurant chain said it now expects a loss of $1.06 to $1.26 a share for the quarter and a loss of 41 cents to 62 cents a share for the year, including charges.

In December, the company said it expected a quarterly loss of $1.02 to $1.23 a share and a full-year loss of 44 cents to 46 cents a share, reflecting "goodwill, store-closing and market impairment charges," relating to problems at its Baja Fresh Mexican Grill unit.

Excluding the goodwill impairment charge, the company expects quarterly EPS of 43 cents to 46 cents, compared to its previous estimate of 46 cents to 50 cents. For full-year EPS, Wendy's sees $2.10 to $2.13, vs. its previous estimate of $2.13 to $2.17.

The consensus forecast of analysts calls for 48 cents and $2.15 a share, respectively, according to Thomson First Call.

Wendy's new guidance includes a hit of 3 cents a share to 2004 earnings because of a legal verdict against the company.

The company still expects a Baja Fresh goodwill impairment charge of $175 million to $195 million. Wendy's expects to close 15 to 18 underperforming restaurants.

Same-store sales at its company-owned Wendy's outlets in the U.S. fell 2.1% in December. Sales at U.S. franchise operations fell 2.0% to 2.3%. Sales at the company's Tim Horton's chain, however, rose 9.8% in the U.S.

Shares rose 20 cents, or 0.5%, to $39.15.