FINANCE

Wendy’s net income soars in Q1; to open 60 stores

BY Dan Berthiaume

Dublin, Ohio – The Wendy’s Co. reported soaring net income in the first quarter of fiscal 2014 on lower costs and a sharp decline in interest expenses. The company also said it plans to open 60 new corporate and franchised stores, as well as remodel up to 400 corporate and franchised stores.

Wendy’s net income skyrocketed from $2.1 million to $46.2 million, aided by a $15 million year-over-year reduction in interest expense as a result of the company’s 2013 debt restructuring.

Revenue fell 13% to $523.2 million because of lost revenue following the disposition of 418 company-operated restaurants as part of the company’s “system optimization” initiative. Same-store sales rose 1.3% for company-operated locations and 0.6% for franchise North America sites.

Wendy’s said it plans to reimage 200 company-operated restaurants and 150 to 200 franchise-operated restaurants in 2014.

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REAL ESTATE

Sears planning to close more stores going forward

BY Marianne Wilson

New York — There are more store closings in Sears’ future. In an address at Sears Holding Corp.’s annual shareholders meeting, chairman and CEO Edward Lampert said the company would close stores and look for ways to leverage its real estate as it continues to focus on integrated omnichannel retail and its Shop Your Way rewards program.

"Closing stores is going to be part of our future," Lampert said. "I’d rather do (fewer closures) rather than more, but the world has shifted."

He did not give an estimate on how many stores Sears would close. But with regards to marginally performing stores, Lampert said "the decision more often than not is to not renew the lease."

"We think you don’t need 2,000 stores to be relevant in the United States," he said.

Lampert said that rental income from subleasing store space in Sears stores to other retailers is likely to increase going forward. Sears has closed about 300 stores since 2010, and has spun off its Orchard Supply Hardware, Sears Hometown and Lands’ End businesses. The company currently operates approximately 778 full-line namesake stores and 1,152 Kmart stores in the United States.

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FINANCE

Catalog sales contribute to Body Central Q1 net loss

BY Dan Berthiaume

Jacksonville, Fla. – Body Central swung to a net loss of $9.3 million in the first quarter of fiscal 2014 from net income of $2.7 million a year earlier. Net revenues decreased 26.6% to $59.7 million, compared to $81.4 million for the first quarter of 2013, and same-store sales fell 26.8%.

Body Central attributed part of the net loss to the unprofitability of its catalog business, which has become less important to customers as the company’s direct sales business transitions to e-commerce. The retailer will evaluate the merits of its catalog business for the remainder of the fiscal year. Body Central also cited sales challenges in tops and dresses.

“We continue to monitor inventory levels closely while refining assortments and messaging that can stimulate traffic and sales,” said Brian Woolf, CEO Body Central. “We remain focused that taking these steps will improve the customer experience in both our stores and e-commerce businesses, and ultimately improve our financial performance."

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