Colorado Springs Retail Briefs: May 2, 2008

Colorado Springs Business Journal, May 2, 2008 by Joan Johnson

Triarc Companies Inc., the franchisor of the Arby's restaurant system, and Wendy's International Inc. have signed a definitive merger agreement, which has been approved by the boards of directors of both companies.

The combined quick-service restaurant brands will have about 10,000 restaurants and annual system sales of about $12.5 billion, positioning it as the nation's third largest quick service restaurant company.

Arby's and Wendy's will operate as autonomous brand business units with headquartered in Atlanta, Ga., and Dublin, Ohio.

The new company expects to pursue global expansion for both brands through acquisitions and new unit development.

Triarc Chief Executive Officer Roland Smith will continue in that role for the combined company and also will become chief executive officer of the Wendy's brand.

Triarc will change its corporate name post-merger to include "Wendy's."

Wendy's shareholders will receive a fixed ratio of 4.25 shares of Triarc Class A Common Stock for each share of Wendy's common stock they own.

"We believe this transaction with Triarc is in the best interests of all of Wendy's constituencies and represents superior value to what the board anticipates Wendy's would have generated as an independent company," said James V. Pickett, Wendy's chairman.

The transaction is subject to regulatory approval and customary closing conditions and is expected to close during the second half of 2008.

Mom will be getting more 'thoughts'

Mom, don't expect much this Mother's Day.

According to a survey by the National Retail Federation, consumers plan to scale back on the quantity of gifts they buy for the holiday.

NRF's 2008 Mother's Day Consumer Intentions and Actions Survey, conducted by BIGresearch, shows that consumers will spend an average of $138.63 this year, compared to $139.14 last year. Total consumer spending is expected to reach $15.8 billion.

Of the 84.2 percent of consumers celebrating Mother's Day, the majority will invest in one major gift for mom, instead of several smaller gifts.

This is largely apparent in the jewelry category. While the percentage of those buying jewelry decreased from last year (32.8 percent vs. 29.7 percent), those planning on buying mom something shiny will still spend a total of $2.7 billion, compared to $2.1 billion last year.

"Mom has been saying for decades that it's the thought that counts on Mother's Day, and this year, kids might actually be listening," said NRF President and CEO Tracy Mullin. "Retailers will offer specials on popular items such as digital cameras and gardening tools to make it easy for those who want to surprise mom with a gift."

When it comes to popular gifts, consumers will shell out nearly $3 billion on a special dinner or brunch, $1.2 billion on consumer electronics like digital cameras, digital photo frames and video cameras, $2 billion on flowers, $1.4 billion on clothing and accessories and $1.1 billion on personal service gifts like a trip to a favorite spa or salon.

Shoppers also will spend $1.6 billion on gift cards/gift certificates, $696 million on housewares and gardening tools and $672 million on greeting cards.

The majority of consumers shopping for Mother's Day gifts will head to specialty stores (35 percent), discount stores (25.7 percent) and department stores (28.8 percent). Others will shop at specialty clothing stores (6.6 percent), online (18.3 percent) and through catalogs (3.4 percent).

Young adults aged 18-24 will spend the most, an average of $170.71. The 25-34 year-old age group will spend an average of $153.17, followed by 35-44 year-olds, who will spend an average of $145.86.

"Consumers will be very cautious with their wallets this Mother's Day, heeding mom's advice that she really doesn't need much," said BIGresearch vice president of strategy Phil Rist. "Gas prices and other economic issues will still be at the forefront of people's minds as they shop around for the perfect gift for mom."

Joan Johnson covers retail for the Colorado Springs Business Journal.