After completing the sale of Tim Hortons and Baja Fresh Mexican Grill, Wendy's International (NYSE:WEN)'s fourth quarter 2006 report revealed a business struggling to recapture core market share, while rivals Burger King and McDonalds report strong performances for the same period.
Wendy's revenue compared to the same quarter '05 was down slightly, from $602.5 million to $596.4 million, but earnings took a dramatic tumble from $30 million to $3.1 million. Much of the drop is attributable to changes brought about by the spin-off of the doughnut and Mexican food companies.
Per-share earnings fell from $.25 (skewed last year by the Tim Horton sale) to $.03. Adjusted EBITDA from continuing operations was down to $38.4 million in the fourth quarter of 2006 from $46.0 million the previous year.
Wendy's stock dropped 2.1% on Friday, closing at $33.11. Wendy's Board voted to pay a $.085 quarterly dividend for the quarter, the 116th consecutive dividend.
Looking hard for a positive note, I noted store margins at company-owned locations rose from 7.7% to 8.4%.
Among the company's plans for the near future to improve profitability are completion of the planned spin-off of Café Express and continued testing of a breakfast menu. It also has announced the move of their advertising account to Saatchi & Saatchi, so look for changes in its marketing message. If only it could bring Dave Thomas back from the dead...
Also check out some other earnings reports that we're following, and let us know what you're expecting.
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Reader Comments (Page 1 of 1)
2-04-2007 @ 7:06AM
Gary Engen said...
1/4/07
Dropping Baja Fresh seems like an odd thing for Wendy's to do, considering how well received the franchise has been pretty much everywhere it has opened, (and considering that there are many, many locales yet to be tapped for such a high quality Mexican fast food business), but maybe Wendy's management knows something that we don't.
I suppose they do, but just for arguments sake, I propose that I have a product that would sell like gang busters via Wendy's traditional outlets. (Ergo, if they offered it to their customer base, the stock would head north like a goose in the spring)
To tell the truth, I actually do have such a product, but the trouble is, the management,as it be true of most big corporations, is probably so insulated from any meritorious 'NIH' ideas from without, ('not invented here'), that like most all companies these days that get to a certain size, it doesn't matter how good an idea somebody might have, typically there is no way in hell to get it to the desk of the person with the authority to effect review and pass appropriate judgement on it.
It's only when a successful product is out there in the public sphere with customers lining up in droves to buy it, that a 'hot' product catches the eye of the execs that run such large companies and then it is usually way too late to capitalize on what they have lamentably noticed.
This vexing and always predictably eventuating phenomenon associated with companies that reach sizable dimension, (such dimension ironically gained thru the initial and enthusiastic application of worthy concepts) is a base reason why 'the little guy with the hot idea' is able to 'suddenly' vault past the established giants in this or that industry, (as we see happen time and time again).
It's not outlet-repeated apparent inefficiencies or even unimaginative advertising campaigns that hamper the growth of large franchise-based companies so much as it is a lack of core-related innovative products ever marching in tantalizing and intriguing fashion before the would-be customer... that missing parade of enticements simply too interesting to ignore, that by it's clear absence 'drives' the customer to a different venue/menu.
In any case, I would humbly postulate that Wendy's bottom line would improve dramatically if they would insist on a cultural change that allowed for the great ideas out there, (those capital thoughts produced beyond the confines of the company itself), to at least be known to the executives that, given such presentation, have the savvy and the motivation to appreciate conspicuous synergist/mutually beneficial opportunities.
Ideas flow freely across the spectrum of humanity, worthwhile thoughts are not bound by corporate structure, neither the structure of the buildings the company personal are housed in during the day nor the cultural structure/environment they work in.
Unfortunately, from what I have heard re. the company, successfully running the gauntlet of their low and mid-level execs to get far enough up the line to receive a competent review of your offering is nearly impossible. Again, nothing new there. That is the way big companies operate. Go to Hollywood with a script that is otherwise destined to win an Academy Award for Best Screen Writing and statistically the odds are overwhelming that you will probably never in your natural lifetime be able to place it in the hands of someone highly placed and sophisticated enough in this or that studio to recognize what you have written is stellar. We all know how it works.... frustrating, maddening, unfair and inefficient as it is, 99.999% of the time it simply doesn't.... work.
Be that as it may, my product will be in the marketplace soon enough and when the top brass at Wendy's then see it, (which they definitely will) and note how inarguably obvious it manifests popularity across the socioeconomic spectrum, (especially to the heart of the company's own demographic), they will comment among themselves in such manner as, "Wow, how come we didn't see this coming? This would have been extremely additive for us! Why didn't we know about this? We could have capitalized on this big time!"
But as they voice such lamenations, just a few floors below them, nobody in the bowels of their company, (just as it be in other big corporations), will, if ever asked, dare admit the truth... that those employees charged with furthering the companies success by first recognizing the value of this or that item presented from without and then noting it's apparent applicability to the company that they work for.. the company that pays their salary...would have ever risked pressing the folks running the company to adopt an innovative concept... because such salaried personal are generally way too busy covering their asses to risk conveying anything noteworthy up the line to the top. In any corporate hierarchy the farther you try to push the stone up the hill, the steeper the ground, the heavier the stone and the riskier the effort for the one doing the pushing.
And as to your reference in your piece re. the new ad agency, I would respectfully offer:
if you don't change what's in the tent/bring in new attractions, hiring new carnival barkers won't do much for attendance.
I am not bitter, in fact I have not even showed my product to Wendy's... yet...
but I know how these things work and I will be amazed if I can even get in the door.
That's fine, by their very nature, worthy ideas have inherent momentum of their own and they will move to the fore, irrespective of how few doors to executives be open and as said, this product is going to get out there very soon anyhow.
Gary/AStalwartSoldierInTheArmyOfDreams/Engen
509-966-5115
2-04-2007 @ 11:57AM
Leslie Alderman said...
You are absolutely correct. What you do is quite simple, and has been the backbone of successful new start-up venture through out the history of our country. You take the closed door and deaf ears that greet your ideas and use them as the launching pad to founding your own operation and company. Let the corporate stuffed shirts worry about protecting their jobs and the kids college funds. Get yourself busy making your idea becoame a reality. Do whatever you have to to begin offering your product to the masses. You are hand wringing and waxing poetic about an entrenched mindset and operational system that works to the detriment of the companies you complain about. Turn that anguish into fuel and power your idea into reality. I did it. I quickly recognized what a total waste of time and effort my attempt to show a couple of large companies what my ideas were. Consequently, I went out on my own, with my own money, and got going. My total disgust with the whole system motivated me learn how to do my own patent work. After doing my own development, testing, pre-production prototyping, along with EVERYTHING associated with receiving 3 U.S.Patents, I have a highly successful product, internet sales operation, and resulting revenue stream. My advice is to stop wasting your time, efforts and talents lamenting the obvious. Pull yourself free. If the idea is as wonderful and potentially saleable as you claim, then take the leap of faith and just do it.
2-04-2007 @ 10:52PM
Jim Wright said...
I have a sure-fire breakfast menu that will make Wendy's or any other company a mint and a winner in the commercial breakfast contest.
jimw541@hotmail.com