LOS ANGELES – Wendy's International Inc. (WEN) Thursday lowered its profit forecast for the year due to weak sales at its fast-food restaurants and the cost of taking its Tim Hortons (search) bakery chain public, sending it share price down over 3 percent in afternoon trading.
Although the No. 3 U.S. hamburger chain behind McDonald's Corp. (MCD) and Burger King Corp. (search) reported quarterly earnings rose 4 percent, the company has been struggling with stepped-up competition from bigger rivals, higher beef prices and slower consumer spending.
Net income for the third quarter ended Oct. 2 rose to $72.1 million, or 61 e 2000.
For the full year, Wendy's lowered its profit outlook to a range of $2.12 per share to $2.15 per share. Its previous forecast had called for earnings of $2.20 per share to $2.26 per share and analysts were expecting earnings of about $2.19 per share, according to Reuters Estimates.
Wendy's said sales at its namesake hamburger restaurants would be lower than expected and that the impact of recent hurricanes had added to its costs. The Dublin, Ohio-based company also said it will open fewer new restaurants in 2005 than originally planned.
Beef costs are expected to drop more than 10 percent in the current quarter from the third quarter.
Wendy's said it still expects to file with the Securities and Exchange Commission (search) for an IPO of 15 percent to 18 percent of Tim Hortons in early December. The IPO itself is targeted for March of 2006.
Wendy's shares were down $1.55, or 3.3 percent, at $45.45 in afternoon trading Thursday on the New York Stock Exchange. The stock had been down about 1 percent before the announcement.
Wendy's stock has risen about 17 percent so far this year, partly due to investor excitement about the Tim Hortons spin-off. The Dow Jones U.S. Restaurants and Bars index , of which Wendy's is a component, is down about 4 percent for the year.