Wendy's lowers costs in 1st quarter, performance beats Wall Street expectations
DUBLIN, Ohio - Wendy's reported a sharply higher profit for its first quarter on Thursday as the hamburger chain saw lower costs and an improvement in sales.
The results beat Wall Street estimates, and its stock rose nearly 6 per cent higher in premarket trading.
Sales at established company-owned restaurants climbed 1.3 per cent as a result of successful product promotions and improved traffic at remodeled locations, Wendy's said.
At franchised locations, the figure rose 0.6 per cent.
Wendy's Co., based in Dublin, Ohio, attributed the stronger performance at its company-run locations to the higher number of remodeled stores, which the company has been pushing aggressively as a way to position itself as a more premium fast-food chain.
CEO Emil Brolick said the solid performance was particularly rewarding given an extremely rough winter that cut down on foot traffic, on top of already intense competition in the sector.
For the quarter ended March 30, Wendy's earned $46.3 million, or 12 cents per share. That compares with $2.1 million, or 1 cent per share, a year earlier.
The improved profit was partly the result of a reduction in total costs and interest expenses. The company also booked $8.6 million on the sale of some restaurants, as well as a gain on the sale of other surplus properties.
Removing non-repeating items, earnings were 7 cents per share. Analysts surveyed by FactSet predicted earnings of 5 cents per share.
Revenue declined 13 per cent to $523.2 million due to the sale of 418 company-run restaurants, but that was still better than the $502.7 million Wall Street expected.
Shares rose 48 cents to $8.81 before the market opened.
The restaurant operator stood by its outlook for 2014 adjusted earnings between 34 and 36 cents per share.
Long term, Wendy's still anticipates mid-teens growth in adjusted earnings per share.
Wendy's has more than 6,500 restaurants, with the majority of those in the U.S.
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