Wendy Announces Bigger 3rd Q Losses

Major fast food company, The Wendy’s Co. (NYSE:WEN) announced a wider than expected loss in the third quarter, with the company paying off Arby’s chain related costs that were incurred after selling the chain.

Wendy’s announced on Wednesday that the company lost almost $4 million or around 1 penny for every share. This missed analyst estimates of losses of around $3 million. Last year Wendy’s reported losses of $909,000 per share, when the fast food company still owned Abby’s.

Wendy’s reported that the losses were mostly because of the expenses related to the spinoff of Arby’s in July, this also included expenses of retaining employees. Other earnings, excluding one time expenses of spinning of Arby’s are said to be around 5 cents per share. Arby’s was part of Wendy’s for more than three years, before splitting off this year. The company is now faced with the challenging task of proving to its investors that it will be able to perform better off on its own.

Although the overall revenue at $617 was lower than what was expected by analysts, it was higher by 2 percent from last year’s revenue of $611 million.

The fast food giant is currently in the process of revamping its menu and in this process is adopting new preparation methods and also offering new ingredients for its healthy salads and other offerings such as hamburgers.  According to Emily Brolock, the Chief Executive Officer of Wendy’s, the recently launched line of  the Dave’s Hot ‘N Juicy burgers has exceeded the expectations of the company and are also planning to gain leadership in the premium quality category of hamburgers.

There was no breakdown of what percentage of the revenue came from the Dave’s burgers.

Wendy’s also announced new plans to make changes to its menu offerings, which are designed to attract the highest number of customers in the ailing economy. The company is also planning to introduce a new line of cheeseburgers called the “W” line, which are meant of the mid-tier budgeted people. These burgers are priced around 99 cents and are much cheaper than the $6 Dave’s cheeseburgers.

The dual priced burgers are part of Wendy’s “barbell” approach to pricing, which was previously talked by the company. The low cost burgers will succeed in attracting customers who have cut back on eating outdoors because of job cuts or increasing food prices.

The shares of the fast food company fell by 5 percent on the New York Stock Exchange in the early trading period.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.