Fast Food Brands Report Some Slower-Than-Expected Sales

Wendy's and Yum! Brands reported October sales affected by an ongoing price war.

Author:: Kevin Burke
Publish date:: Nov 7, 2002 6:58 PM EST

Fast-food chain operators

Wendy's International

(WEN) - Get Report

and

Yum! Brands

(YUM) - Get 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.

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.