UPDATE 1-Wendy's profit beats Street; earnings outlook strong
July 23 (Reuters) - Wendy's Co posted a higher-than-expected quarterly profit on Tuesday and forecast strong earnings growth starting next year, sending its shares up 10 percent in early trading.
The No. 2 U.S. burger chain also raised its quarterly dividend by a penny, to 5 cents a share, and said it would sell about 425 company-operated restaurants by mid-2014 as part of a drive to improve its finances.
Second-quarter net income was $12.2 million, or 3 cents per share, compared with a year-earlier loss of $5.5 million, or 1 cent per share.
Excluding debt retirement costs and other one-time expenses, earnings were 8 cents per share, topping analysts' average forecast by 2 cents, according to Thomson Reuters I/B/E/S.
Revenue rose to $650.5 million from $645.9 million.
The company said it expects a long-term growth rate in the mid-teens for adjusted earnings starting in 2014.
It said selling some of its company-operated stores to franchise operators would generate higher operating margins and increase long-term earnings-per-share growth, and aid its new branding efforts.
The company has been working on its image, with a new logo, restaurant renovations and a "Right Price, Right Size" menu.
Earlier this month, the fast-food chain, best known for its thick milkshakes and square hamburger patties, added a new pretzel bacon cheeseburger to its menu - a higher-priced item aimed at attracting younger diners.
The company restated its prior forecast for full-year adjusted profit of 20 cents to 22 cents per share.
System-wide sales at established restaurants increased by 0.4 percent in the second quarter, well short of the 1.1 percent gain expected by analysts polled by Consensus Metrix.
Shares of the Dublin, Ohio-based company were up 73 cents to $7.41 in early trading.