Fast Food Brands Report Some Slower-Than-Expected Sales
Fast-food chain operators
Wendy's International
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and
Yum! Brands
(YUM) - Get Yum! Brands, Inc. Report
delivered disappointing sales results for October on Thursday, as bad weather and an industrywide price war depressed revenue.
Wendy's, the nation's third-largest hamburger chain, said same-store sales at its flagship restaurants climbed 2.6%, which was weaker than anticipated. The company also pared its earnings outlook for fiscal 2002, citing weak October sales, a slumping Canadian exchange rate, and interest owed on $225 million in senior notes issued earlier in the year to acquire Mexican food chain
Baja Fresh
.
"Despite these issues, our brands remain healthy," said Chief Financial Officer Kerrii Anderson.
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The company, which also operates the
Tim Horton's
chain, said it expects to post a full-year net profit of $1.90 a share to $1.91 a share, or 15% to 16% growth, down from its previous forecast for 15% to 18% growth. Analysts were targeting 2002 earnings at $1.93 a share.
"Our 2002 performance, in terms of sales and earnings growth, continues to be superior to the restaurant industry and most consumer companies," the company said in a press release. "We are pleased with our strong performance, especially considering unprecedented discounting in the quick-service restaurant industry."
Meanwhile, Yum said same-store sales fell 1% last month due to a 7% decline at its
Kentucky Fried Chicken
chain. The company said comparable store sales at its
Pizza Hut
and
Taco Bell
restaurants rose 5% and 1%, respectively. International sales increased 6%. The company will report earnings Dec. 5, and analysts are expecting a profit of 56 cents a share, according to Thomson Financial/First Call.
Wendy's shares closed down $1.38, or 4.7%, at $28.11, while Yum tacked on 44 cents, or 2%, to finish at $22.80.
