Wendy’s Co. said Monday that a key measure of earnings dropped 30 percent in the fourth quarter, as charges for selling Arby’s offset the effects of a jump in revenue.
More visitors, who spent more on each visit, helped push revenue up 5.6 percent. So did higher prices. The company also credited the remake of its premium cheeseburger, Dave’s Hot `N Juicy, during the fall.
But Wendy’s has also been undertaking a much broader remodeling effort. In the past couple of years, it’s tried to work over its entire menu, introducing new salads, fries and desserts to attract customers who thought the menu had grown stale. It’s expanding into breakfast again after a failed attempt a few years ago. It’s growing internationally and just opened a restaurant in Japan, a change from its previous focus on domestic operations. It’s also remodeling restaurants.
Income from continuing operations fell to $4.3 million in the last three months of the year, down from $6.1 million a year ago. The company didn’t report what net income was on the basis that’s usually reported in regulatory filings. Wendy’s said it would report full results on March 1, but didn’t give the reason for that decision.
On a per-share basis, adjusted earnings were 4 cents, in line with the expectations of analysts polled by FactSet. That number excluded one-time charges like costs for selling Arby’s over the summer and writing down the value of some of its assets. However, Wendy’s did report that its per-share earnings would have been 1 cent if the one-time charges were included.
Revenue climbed to $615 million from $582.6 million a year earlier. The latest figure narrowly beat the $613 million predicted by analysts.
Revenue at restaurants open at least a year climbed 4.4 percent in North America, the highest number in nearly 8 years. That’s a key measure of a company’s health because it strips out the effect of newly opened or closed stores.
Its shares fell 11 cents, or 2.1 percent, to $5.10 in morning trading.
Emil Brolick, who became CEO in September, said the company is “making progress on re-establishing Wendy’s as the quality leader and innovator” in fast food. He’s spoken before about how he’s keenly aware of growing competition from fast-casual burger chains like Five Guys and Smashburger, and his goal is to attract customers who want a higher-end fast food.
Wendy’s managed to increase its profit margin to 15 percent from 14 percent, thanks to the revenue increases. However, like other restaurants, it’s still facing higher costs for some of its ingredients, including beef.
The chain is also still feeling the effects of its combination with Arby’s. The marriage was short-lived, beginning in the depths of the financial crisis in fall 2008 and ending this summer when Wendy’s sold Arby’s to a private-equity firm, saying it wanted to focus on the Wendy’s brand. Since then, it’s installed Brolick, a Yum Brands veteran, as CEO, and moved its headquarters back to Dublin, Ohio, from Arby’s home base in Atlanta. Wendy’s said Monday it spent nearly $46 million over 2011 to break up with Arby’s, including severance costs for some employees and retention bonuses for others.
China and the United States have pledged during a visit by Treasury Secretary Timothy Geithner to cooperate on boosting the global economic recovery, but Chinese backing for U.S. sanctions on Iran’s oil industry appeared unlikely.
China buys almost one-third of Iran’s oil exports and has rejected the U.S. sanctions as a tool to rein in Tehran’s nuclear program. That sets Washington up for a public setback if the government of the world’s second-largest economy refuses to cooperate.
Geithner was expected to make the U.S. case for sanctions in meetings Wednesday with Premier Wen Jiabao, Vice President Xi Jinping _ who is in line to become China’s next leader _ and Vice Premier Li Keqiang, another rising star.
Geithner met with his counterpart, Vice Premier Wang Qishan, on Tuesday night. He said he told Wang that the two sides “share so many important interests, and among those are increasing our cooperation on global economic issues.”
China’s official Xinhua News Agency said China and the United States pledged to further cooperate to boost the global economic recovery, and quoted Wang as saying the world economic situation is still “very complex and grim.”
Wang also called on the United States to loosen export controls of high-tech products to China, one of China’s complaints about the countries’ trade relationship. U.S. critics, meanwhile, say Chinese currency controls keep the yuan undervalued and give its exporters an unfair advantage, distorting trade at a time when Washington and other governments are under pressure to bring down unemployment.
China’s trade surplus with the United States widened 24.2 percent to $17.4 billion in December, according to data released Tuesday.
Geithner also is due to visit Tokyo, another major buyer of Iranian oil, for talks after he leaves Beijing on Thursday morning.
China has criticized U.S. sanctions on Iran, approved by President Barack Obama on New Year’s Eve, as improper and ineffective. Beijing supported U.N. sanctions on Iran’s nuclear program but says action should be multilateral.
The sanctions would target Tehran’s oil industry by barring financial institutions from the U.S. market if they do business with Iran’s central bank.
China’s oil imports “have nothing to do with the nuclear issue,” a Chinese deputy foreign minister, Cui Tiankai, said Monday.
“We should not mix issues with different natures, and China’s legitimate concerns and demands should be respected,” Cui said.
Analysts in Beijing said China has no reason to go along with the sanctions. “China does not want to be seen as helping the U.S. when China’s own interest is concerned,” said Wang Lian, an Iran expert at Peking University’s School of International Relations.
He said Chinese opposition might be reinforced by Washington’s latest military strategy report published last week. It singles out Beijing as a power with the potential to affect the U.S. economy and security.
Industry analysts say that even if China agreed, it would face formidable challenges in trying to replace Iran as an oil source.
China’s fast-growing economy is the world’s biggest energy consumer and imports half its oil. Some 11 percent comes from Iran, or about 600,000 barrels per day in November, according to energy market analysts Argus Media.
Still, Geithner’s trip might not be wasted, because Washington is only starting a campaign to promote its sanctions, Peking University’s Wang said. He said China might face pressure to cooperate if other governments agree to comply.
“The U.S. is not wasting their efforts,” Wang said. “Pressuring China is what they can do, but it is fairly difficult to get China to stand on their side.”
WINDING DOWN: After 58 years of selling music, Webster Records is pulling the plug.
The store at 117 West Lockwood Avenue in Webster Groves will shut its doors on Jan. 31, Bill Wondracek, a clerk, said today.
The store has mainly been reduced to selling rock ‘n’ roll CD’s to teens over the past few years, despite having a history of specializing in classical, jazz and pop music, much of it on vinyl, Wondracek added.
Jennifer Bellm has owned the shop for about five years. She was not available for comment.
Prior to that, it was owned by Dan Warner who sold it when he became part of the team that was involved in trying to revive the Switzer’s Licorice brand low rates payday advance.
Until the shop is shuttered, remaining inventory will be on sale, store manager Jim Lovins said in an email. Starting today it’s 30 percent off of retail and prices will be discounted through the month, he added.
Credit card rewards are the new social currency.
Citibank customers can now use Facebook to pool their rewards points online.
The bank on Tuesday launched a Facebook application that lets users team up to use their points, whether it’s for charity, a group gift or a personal goal. Citi says it’s the first bank to offer such a feature.
The app builds on a service Citi introduced last year that lets customers transfer points to one another on the bank’s homepage. After getting feedback, executives decided to expand the rewards sharing capability and offer it through social media.
“Now we’re delivering it to where customers are every day,” said Ralph Andretta, who heads Citi’s loyalty programs and co-branded cards.
Andretta noted that customers will have far more flexibility with their points, whether it’s to help a friend fly home from college or team up for a big-ticket reward. The company is giving away 2,500 free rewards points to each of the first 4,000 customers to sign up.
To get started, customers download the ThankYou Point Sharing App, which is linked on Citi’s Facebook page at http://www payday loan.facebook.com/citibank.
Customers can then start a rewards pool by naming a recipient and explaining its purpose. The recipient of the points maintains control of any contributions, so it’s best if you know and trust that person.
Pool recipients must be individuals and cannot be an organization, even if the intended goal is a charitable donation.
Users can promote their goals by sharing links on their Facebook pages or privately inviting other Citi customers to contribute. Donors can see the total number of points a cause has amassed.
The app can collect personal information from Facebook profiles. But Citi says it does not share any customer account information with Facebook.
The program isn’t only for credit card holders either. Citi checking account customers can also earn ThankYou points. Citi introduced its lineup of ThankYou credit cards last year.
Some airline customers won’t see savings this weekend even though several federal taxes on tickets have expired.
US Airways and American Airlines raised fares to offset the tax savings.
That means instead of passing along the savings from expired taxes, the carriers are pocketing the money while customers pay the same amount as before.
But other airlines left their prices unchanged on Saturday. Consumers could save money by shopping around.
The expired taxes can total $25 or more on a typical $300 round-trip ticket. For a September trip between Dallas and San Francisco, the cheapest American flight on Travelocity.com was $24 higher than offerings from United, Continental, Delta and Virgin America, which did not raise fares.
The taxes expired after midnight Friday night when Congress failed to pass legislation to keep the Federal Aviation Administration running.
That gave airlines a choice: They could do nothing _ and pass the savings to customers _ or they could grab some of the money themselves.
“We adjusted prices so the bottom-line price of a ticket remains the same as it was before … expiration of federal excise taxes,” said American spokesman Tim Smith. US Airways spokesman John McDonald said much the same thing _ passengers will pay the same amount for a ticket as they did before the taxes expired.
Smith declined to say whether the increase would be rescinded if Congress revives the travel taxes.
Tom Parsons, who runs the Bestfares.com travel website, said consumers should get a break.
“Why would the airlines deserve it?” he said. “They already hit us with enough fees. Now they’re keeping the government fees too.”
The Transportation Department says it will lose $200 million a week. J.P. Morgan analyst Jamie Baker said airlines could take in an extra $25 million a day by raising fares during the tax holiday.
Parsons said competitive pressure eventually will force the airlines to match _ either they’ll all pass the tax savings on to passengers, or they’ll all raise fares and keep the money themselves.
Southwest Airlines and its AirTran subsidiary raised prices by $8 per round trip, said spokeswoman Marilee McInnis.
Southwest’s support could be crucial if the airlines decide to keep the tax money. Southwest carries more U.S. passengers than anyone, and it effectively sets rates on many routes. Southwest torpedoed attempts by other airlines to raise prices in the last two weeks. CEO Gary Kelly has publicly worried that airlines could frighten away passengers by raising prices too high.
That may be less of a fear this time, however, since consumers wouldn’t be shelling out more money for tickets _ they just wouldn’t get an unexpected discount, courtesy of Congress.
Several federal travel taxes expired when Congress adjourned for the weekend without passing FAA legislation. Lawmakers couldn’t break a stalemate over a Republican proposal to make it harder for airline and railroad workers to unionize.
Air traffic controllers stayed on the job, but thousands of other FAA employees were likely to be furloughed.
Airlines stopped collecting a 7.5 percent ticket tax, a separate excise tax of $3.70 per takeoff and landing, and other fees. Those add up to about $32 on a round-trip itinerary with base fare of $240 and one stop in each direction.
Other government fees for security and local airport projects are still being collected. They boost the final cost of that $240 base-fare ticket to $300.
Passengers who bought tickets before this weekend but travel during the FAA shutdown could be entitled to a refund of the taxes that they paid, said Treasury Department spokeswoman Sandra Salstrom. She said it’s unclear whether the government can keep taxes for travel at a time when it doesn’t have authority to collect the money.
A bomb hidden under a parked car exploded near Muslim pilgrims Friday, killing at least two and wounding four as they made their way to an annual Shiite religious festival in a holy city south of Iraq’s capital.
Pilgrims are an easy target for insurgents looking to stoke sectarian violence as U.S. troops prepare to depart Iraq by the end of the year.
Friday’s bomb exploded in a parking lot about 14 miles (22 kilometers) from the holy city of Karbala, where thousands of pilgrims are flocking this weekend for the annual Shiite festival of Shabaniyah.
The blast ignited five nearby cars, causing a second explosion when a gas tank caught fire, said Maj. Gen. Othman al-Ghanimy, commander of Karbala military operations. Two pilgrims were killed and four wounded, he said.
Karbala provincial councilman Hussein Shadhan al-Aboudi put the toll at three dead and 28 injured.
The weekend’s religious festival celebrates the birth of Mohammed al-Mahdi, the twelfth and so-called hidden imam, who disappeared in the ninth century. It is always held in the Islamic month before the Muslim fasting month Ramadan which this year falls in August.
Also Friday, a roadside bomb targeted a police patrol in Baghdad’s southern Dora neighborhood, killing one passer-by and wounding three instant credit reports.
With Iraq still plagued by widespread violence, Washington and Baghdad are considering keeping as many as 10,000 U.S. forces in Iraq beyond a year-end departure deadline. In excepts from an interview to air Friday night, Prime Minister Nouri al-Maliki repeated his long-standing offer for a small number of American military trainers to stay and help Iraq’s fledgling security forces.
Both nations are moving toward a troops withdrawal.
On Friday, officials said the last 10 Iraqi detainees in U.S. military custody are about to be turned over to Iraqi authorities.
Justice Ministry spokesman Haider al-Saadi said nearly 200 inmates were transferred to Iraq’s custody earlier this week. They were among the last inmates to be held by the U.S. and included some top allies and relatives of former dictator Saddam Hussein.
The handover of the prisoners is the final step by the U.S. to relinquish control of Camp Cropper on Baghdad’s western outskirts.
The process began a year ago, but since has been marred by high-profile escapes by some of its inmates.
An unexpected drop in hiring put an end to the excitement that had been bubbling up on Wall Street over the past two weeks.
Stock indexes fell sharply Friday, erasing most of the week’s gains, after the government reported that U.S. employers created the fewest number of jobs in nine months. The 18,000 net jobs in created in June were a fraction of what many economists expected and dampened hopes that the economy was improving. Private companies added jobs at the slowest pace in more than a year. The unemployment rate edged up to 9.2 percent, its highest level this year.
A broader measure of weakness in the labor market was even worse. Among Americans who want to work, 16.2 percent are either unemployed or unable to find full-time jobs. That was up from 15.8 percent in May.
“There’s just a lot more evidence than before that we’re in an extended weak patch,” said Brian Gendreau, market strategist for Cetera Financial Group. He said private economists will likely reduce their projections for overall economic growth this year.
The Standard and Poor’s 500 index fell 9.42 points, or 0.7 percent, to 1,343.80. That eliminated the index’s gains from Thursday and left it with a 0.3 percent gain for the week.
The Dow Jones industrial average lost 62.29, or 0.5 percent, to 12,657.20. The Dow, which had been down by as much as 150 points Friday, had only its second down day over the past nine. The Nasdaq composite dropped 12.85, or 0.4 percent, to 2,859.81. It was its first loss in two weeks.
Companies whose business would be most affected by a weakening economy were hit hardest. Bank of America Corp., General Electric Co. and Boeing Co. were among the biggest decliners in the Dow average.
“The chance of a July bounce back in the economy looks pretty slim now,” said Jay Tyner, president of Semmax Financial Group in Greensboro, North Carolina.
Expectations for Friday’s jobs report were raised Thursday after payroll processor ADP said that private companies added more than 150,000 jobs in June. While the ADP report does not always accurately predict the broader Labor Department report, some investors said that the apparent clashing pictures of the job market were due to a jobs pickup in the last weeks of June.
Phil Orlando, chief market strategist at Federated Investors, said he believes manufacturers began rehiring workers in late June following signs that Japan’s economy was improving. Hiring slumped in May due partly to high fuel prices and disruptions of industrial supplies because of the earthquake and tsunami disasters in Japan guaranteed online payday loans.
Traders rushed to the relative safety of government bonds. The yield on the 10-year Treasury note fell to 3.01 percent from 3.19 percent just before the jobs report came out. Bond yields fall when demand for them increases.
Oil prices fell 2.5 percent. The slowdown in hiring suggested that demand for fuel will increase less than traders had expected. Lower fuel prices could eventually help the economy by leaving consumers with more money to spend on things other than gas.
Weak economic data this spring pushed stocks near their lowest levels of the year two weeks ago. Markets recovered last week, giving the Dow its best week in two years, on signals that the economy was rebounding. Stock indexes closed near their 2011 highs on Thursday.
Despite the weak job market, analysts still expect earnings at big U.S. companies to be strong. Companies are benefiting from export growth as the weak dollar makes American goods cheaper, and therefore more competitive, in overseas markets. Aluminum maker Alcoa Inc., one of the 30 companies in the Dow average, will be the first major corporation to report second-quarter financial results on Monday.
Orlando, the market strategist, said investors will be looking to see how companies have responded to higher commodity costs and a shortage of parts from Japan. “It’s not going to be an earnings season where you can have a blanket proclamation regarding how companies are doing this time around,” he said.
In other company news, Rupert Murdoch’s media conglomerate News Corp. fell nearly 4 percent as a phone-hacking scandal at its News of the World tabloid deepened. A former editor of the paper who later served as spokesman for British Prime Minister David Cameron was arrested Friday. News Corp. shuttered the 168-year old paper on Thursday in hopes of saving its deal to take over the lucrative British satellite TV company British Sky Broadcasting. Government approval of that deal will now be delayed because of the crisis, which has shocked Britain.
The Dow rose 0.6 for the week, the Nasdaq 1.6 percent.
Two stocks fell for every one that rose on the New York Stock Exchange. Volume was lighter than average at 3.1 billion shares.
A nationwide crackdown is coming for people fraudulently drawing unemployment payments _ those who were never eligible and workers who keep getting checks after they return to work _ a $17 billion benefits swindle last year alone, say federal officials.
With the poor economy lingering and the jobless rate remaining high, Rhode Island and other states are stepping up efforts to stop the fraud and improper payments.
As much as 30 percent of the wrong payments in 2010 went to people who had returned to the workforce but continued to claim benefits, according to Dale Ziegler, deputy administrator for the Office of Unemployment Insurance at the U.S. Department of Labor. Those payments came even after a 2009 executive order by President Barack Obama seeking new policies to cut payment errors, waste, fraud and abuse.
Ziegler said states will be required to submit plans by Sept. 30 to the federal government on how they plan to curb such payments, Ziegler said.
“This is a national concern,” said Raymond Filippone, assistant director of income support at the Rhode Island Department of Labor and Training. “States across the country are stepping up and looking at overpayments and detection.”
Since last year, Rhode Island now has four investigators assigned to ferret out double-dippers scamming the system, Filippone said and will add a fifth this year. The state has also for the first time retained a collection agency to recoup incorrectly paid payments.
Filippone said the state has paid out $33 million in overpayments since 2008. The May unemployment rate in Rhode Island is the third highest in the country at 10.9 percent.
Providence resident Jose L. Roque, 43, is among 15 people charged last month with bilking the state’s unemployment benefits system. He faces one count in state court of obtaining money under false pretenses for allegedly accepting more than $20,000 in benefits over nearly four years while working for a Warwick landscaping company, court records show.
He was released pending a pre-arraignment conference next month. Roque has yet to enter a plea. Officials say people convicted of this crime are usually ordered to pay restitution as punishment.
“I kept working and collected at the same time. I know that’s my big mistake,” Roque said in a telephone interview. “I feel real bad. I’m sorry for that. … Before I had problems. You know, now I got more problems.”
Since the economic dive began in 2008, 126 Ocean State residents have been criminally charged with defrauding the unemployment benefits system, said state police Capt. James O. Demers.
Since 2008, $8 million in overpayment shelled out by Rhode Island have been classified as fraud, officials said. Filippone said of the $33 million in overpayments paid out over that period, $16.5 million has been recovered.
Those losses are why the federal government is pressing states to keep a closer watch on the $155 billion in jobless benefits paid annually to the nation’s unemployed workers.
Five states are collaborating to address a problem known as separation errors, including payments to people who file for unemployment benefits after they’ve voluntarily resigned from their jobs. Those individuals are not eligible to collect, but some slip through the cracks because their former employers do not respond to states’ requests to verify the ex-worker’s claim, Ziegler said.
Ohio, Colorado, New Jersey, Utah and Georgia have developed a web-based system to share unemployment insurance information with states, multistate employers and others, Ziegler said.
In New Jersey, officials have also come up with a system to kick the newly employed off the jobless benefits rolls faster, Ziegler said. Whenever people show up in the national directory of new hires, they are assigned a code in the unemployment benefits system that flags them if they file for weekly benefits.
Ziegler said these efforts have reduced the average overpayment from $1,200 to $472. He added the average weekly benefit is $305, indicating most abuses are identified within a week and a half.
Still, Ziegler said officials have been working for years to come up with solutions.
“This is not a simple problem,” he said. “If someone who’s unemployed and not looking for work, how is someone going to find that out? If you’re someone who is claiming benefits and gone back to work, how quickly are they going to find that out? The idea here is prevention.”
Cranston resident Patricia A. Proulx said she’s been wrongfully caught up in the confusion.
Proulx was also charged last month in state court with defrauding the unemployment system of $18,992 from 2007 to 2010, court records show. She said she applied for partial unemployment benefits after her hours at an area hotel were cut back. Proulx has yet to enter a plea.
“If I was doing something wrong, I wasn’t told I was,” said Proulx, adding her superiors told her she was eligible to collect unemployment. “I have no idea what’s going on. When I called unemployment they didn’t want to discuss anything with me. Nobody’s letting me know what’s going on and what I owe.”
Filippone said investigators use multiple methods to identify fraud. They check wage records submitted to the state tax division, the national directory of new hires, and they compare records with state child support enforcement officials. The state also runs an anonymous fraud hotline, subpoenas employer payroll records and sometimes conducts surveillance operations.
Filippone warned scammers are going to get caught and anyone who gets more than what they’re owed must pay up.
“My message is to be honest with us,” he said. “At a later date, it could be years later … when you need the funds again, you’re not going to be able to receive them. … We never take an overpayment off the books.”
LONDON
39 Stereotaxis-17.3%
40 Build-A-Bear Workshop-17.4%
41 Insituform Technologies-17.5%
42 Reliv International-18.7%
43 MEMC Electronic Materials-30.1%
44 Isle of Capri Casinos-31.4%
45 Furniture Brands International-33 Low fee payday loans.0%
46 Brown Shoe-40.9%
47 CPI-49.2%
48 Spartech-49.8%
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