Wendy's Profit Plunges

Shares slide as the burger chain's results come in well below Wall Street's forecast.
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Wendy's

(WEN) - Get Report

fourth-quarter income plummeted 90% as results were hurt by lower franchise revenue and losses related to recently divested chains.

The Dublin, Ohio-based hamburger chain earned $3 million, or 3 cents a share, in the quarter, down from $30 million, or 25 cents a share, a year earlier.

Excluding losses from discontinued operations, which related to the spinoff of

Tim Hortons

(THI)

and the sale of the Baja Fresh chain, earnings from continuing operations totaled $9.9 million, or 9 cents a share. Analysts polled by Thomson Financial forecast earnings of 21 cents a share.

Wendy's shares recently were down $1.24, or 3.7%, to $32.60.

Wendy's revenue fell to $596.4 million from $602.9 million a year earlier, missing analysts' forecast of $624 million.

The top line was hurt by a 20% drop in franchise revenue, which fell to $69.7 million from $87.3 million a year earlier. Sales at the company's restaurants inched up 2.2% to $526.7 million from $515.6 million.

Same-store sales, or sales at stores open for at least a year, increased 3.1% for U.S. company-owned restaurants and 2.7% for U.S. franchised restaurants.

"We ended 2006 with strong momentum, positive same-store sales and significantly reduced costs," President and CEO Kerrii Anderson said a statement. "We intend to build on this momentum and drive even stronger results in 2007 and beyond, as we examine every facet of our business for improvement."