Wendy's Sales Growth Slows, Outlook Intact

CHICAGO – Wendy's International Inc. (WEN) Thursday posted a 2.3 percent rise in June sales at its company-owned hamburger restaurants opened a year or longer as growth slowed from May in part because of wet weather in some U.S. regions.

The No. 3 U.S. hamburger chain kept its full-year profit forecast despite high beef costs. It still expects 2004 earnings in the range of $2.32 to $2.37 a share, up 13 percent to 16 percent from $2.05 a share in 2003.

Dublin, Ohio-based Wendy's said June sales growth started to slow during the first two weeks, but strengthened toward the end of the month. Sales growth has slowed from the robust high single-digit percentage increases of recent months. In May, Wendy's reported same-store sales growth of 6.7 percent.

Wendy's also said it expects food and labor costs to be on plan for the rest of the year.

In July, the company will introduce a new Garden Sensations (search) salad featuring Homestyle Chicken Strips (search). In August, it will test new seasonal salads, low-carb meal options, and combo meal substitutions.

Tim Hortons (search), the company's Canadian-based coffee and fresh baked-goods food chain, posted a 7.9 percent rise in same-store sales in June. The chain has expanded into the New England market by acquiring 42 former Bess Eaton stores.

Analysts, on average, expect full-year earnings of $2.35 a share, according to Reuters Estimates.

Banc of America Securities LLC analyst Andrew Barish rates the stock as "neutral."

"We will begin to look for opportunities to re-evaluate our cautious stance when we believe the market has discounted the slowing same-store sales trends," he said.

Wendy's shares dipped 4 cents to $34.80 on the New York Stock Exchange (search) Thursday.

Beef prices in the third quarter are expected to rise to $1.31 per pound from $1.17 a year ago, up from $1.23 in the second quarter.