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Wendy's U.S. Same-Store Sales Dip

The company holds to its 9- to 18-month Tim Hortons spinoff plan.
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, the fast-food chain struggling with restive shareholders, said same-store sales were slightly worse than expected at company-owned stores in the U.S. last quarter.

Wendy's also said it plans to spin off its entire stake in Canada-based doughnut chain Tim Hortons by late next year, confirming a schedule that has been a bone of contention with some activist investors.

The hamburger purveyor said U.S. company comps fell 2.9% from a year ago, about twice the rate of decline Wall Street expected. Same-store sales at U.S. franchise restaurants fell 1.9% from last year. The company recently announced menu changes to combat the trend, including the return of several 99-cent offerings.

For several years, Wendy's saving grace has been Tim Hortons, the Canada-based doughnut chain that has caught on in the U.S. The company said Tim Hortons' fourth-quarter same-store sales rose 5.8% in Canada and 6.7% at U.S. restaurants.

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Amid pressure from activist hedge funds, Wendy's agreed in July to sell 15% to 18% of Tim Hortons in an initial public offering. The news lifted the stock through the fall but led some investors to call for a complete and immediate spinoff of the unit. Wendy's says the spinoff might not be completed until September 2007.

"Assuming a successful IPO for Tim Hortons in March, the company anticipates that a spinoff would occur as soon as practical, which is expected to be within 9 to 18 months, depending on market conditions," Wendy's said Friday. "We are focused on completing the IPO in order to establish a trading value for Tim Hortons in 2006."

The statement is at odds with suggestions proffered in mid-December by Nelson Peltz, the Milken-era leveraged buyout specialist who owns Arby's. In a filing, Peltz's Trian investment company, which owns a small stake in Wendy's, labeled the company "an inefficient holding company" with hundreds of millions of dollars in needless overhead.

The slow spinoff of Tim Hortons is "an attempt to avoid shining the spotlight on the poor financial performance of Wendy's" flagship business and "would perpetuate a highly inefficient and costly conglomerate structure," Trian said in an



The stock closed at $54.30 Thursday. The 52-week range is $36.73 to $56.40.