Wendy’s Co. WEN 5.42% said on Friday two executives would leave the burger chain as part of a broader organizational overhaul that could include job cuts and new investments.
Trian Fund Management LP, Wendy’s largest shareholder, also said Friday that it is shelving its pursuit of potential strategic alternatives for the company. The activist hedge-fund firm said in May that it intends to explore a potential transaction with Wendy’s, either alone or with third parties, that could involve an acquisition, merger or other transaction.
Trian said Friday that Wendy’s business momentum supports a new capital allocation plan instead. Wendy’s said it is doubling its dividend and increasing its share buyback program.
The company on Friday announced preliminary results for the fourth quarter, which showed that sales in the United States rose nearly 6% in the three months ended Jan. 1 compared to the same period last year. Wendy’s said it opened 38 US restaurants during the quarter and also had a number of closures.
As the U.S. economy shows signs of slowing, consumer demand at fast-food restaurants has generally held up, although businesses have noticed a drop in spending among lower-income diners. Wendy’s said Friday that more customers are turning to the chain’s restaurants for deals.
“We continue to see a consumer that’s a little tighter,” Wendy’s chief executive Todd Penegor said during an investor call Friday.
Wendy’s shares are up 5% to $22.87 in morning trade. They are down 2.85% over the past 12 months.
Wendy’s said it is reassessing some of its more recent investments in light of current economic developments and plans to better link its US and global operations. The company said it is slimming down an earlier test to only build to-go locations with startup Reef Global Inc. and will instead focus on building traditional units. Mr. Penegor said Wendy’s is also looking at its headcount.
As part of the reorganization, the Dublin, Ohio-based fast-food company said Leigh Burnside, its chief accounting officer and chief financial officer in the US, is stepping down to become chief financial officer at another restaurant company.
U.S. President and Chief Commercial Officer Kurt Kane is also leaving the company, after his position was eliminated as part of a “broader organizational overhaul” at the company aimed at keeping general and administrative expenses low in the years to come. The company will pay Mr. Kane compensation for his dismissal without cause, a filing said.
Wendy’s plans to finalize other organizational changes over the next 45 days to reduce costs and increase efficiencies, Mr Penegor said.
Other US companies have announced cost cuts and restructuring plans this month as an economic downturn looms. McDonald’s Corp. announced last week that, as part of a broader strategic plan for the burger giant, it plans to make “difficult” decisions about possible headcount changes at the company by April.
Wendy’s said Friday that fourth-quarter revenue is expected to reach $536.5 million, up from $473.2 million a year ago and ahead of analysts’ expectations of $518.3 million, according to FactSet .
Wendy’s announced Friday that it was doubling its quarterly cash dividend to 25 cents a share. The increase will take effect upon the payment of first-quarter dividends in March, the company said.
The company’s board of directors also canceled a $250 million stock repurchase program that was scheduled to end next month, replacing it with a $500 million repurchase plan scheduled to expire in February 2027.
Trian co-founder Nelson Peltz said Friday that the new capital allocation strategy will support the company’s long-term growth plans.
After Trian announced its push for Wendy’s to explore potential strategic alternatives last spring, some investors had hoped to sell the company, which sent Wendy’s shares higher. Business has slowed over the past year as interest rates have risen, financing has tightened and a recession looms over the US
Mr. Peltz’ Trian is a long-time investor in the chain. The activist investor recently made headlines for a planned proxy fight against Walt Disney Co.
Write to Dean Seal at [email protected]
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