Wendy's/Arby's Profit Drops in Q3

Due to high cost of ingredients and weak sales output, Wendy's/Arby's Group Inc. reported a slight drop in its profits in the third quarter of this year, prompting the operators to slash back sales forecast this year.

A new report released by operators of the Wendy's and Arby's restaurant on Friday showed a slight drop in the fast-food chains' profit in the third quarter of this year as higher ingredient costs and weak sales output put more burden to the company.

In a statement, Wendy's/Arby's Group Inc. announced that it is lowering its profit forecast for this year after losing nearly $1 million in profit in the period that ended October 3.

Company shares were also in a break-even level, failing to meet the $14.7 million or 3 cents per share recorded in the same period last year. The third quarter figures also failed to meet analysts’ expectations of 4cents per share.

Also, Wendy’s/Arby’s revenue fell by 5 percent to $861.2 million, short of the $882.6 million Wall Street forecast.

But despite the relatively dismal sales output during the period, Wendy’s/Arby’s said that it will still increase its quarterly cash dividends – it also authorized the $170 million additional stock buybacks.

Meanwhile, Wendy’s/Arby’s chief financial officer Steve Hare, the additional stock buyback would be put on hold pending the decision of billionaire Nelson Peltz over acquisition plans by a third party.

Hare urged Peltz’s Trian Fund Management to immediately act on the third-party inquiry, saying that the company should “be practical” in its decisions.

According to analysts, the Atlanta-based fast-food chains have been losing customers due to expensive, but low quality menu. The experts also said that the company should do some remodeling in all of its restaurants and its food items.

Wendy's/Arby's has more than 10,000 restaurants in the U.S. and 24 countries and U.S. territories worldwide.


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