In This Article:
The Wendy’s Company WEN reported first-quarter fiscal 2025 results, with earnings meeting the Zacks Consensus Estimate and revenues missing the same. On a year-over-year basis, both top and bottom lines declined.
The quarterly results reflect a decline in global systemwide sales, mainly due to lower same-restaurant sales in the U.S. segment. The top line decreased due to lower company-operated restaurant sales, advertising fund revenues and a drop in franchise royalty revenues.
However, the WEN stock gained 3% in today’s pre-market trading session.
Despite a tough consumer environment in the United States, the company maintained traffic and dollar share. Wendy’s added 68 net restaurants globally and introduced a new field structure to support franchise operations.
Going forward, the company will continue to work on improving food quality, customer service and global restaurant growth. Wendy’s aims to stay aligned with these priorities to support long-term business performance.
WEN’s Q1 Earnings & Revenues
WEN reported adjusted earnings per share (EPS) of 20 cents, which was in line with the Zacks Consensus Estimate. In the prior-year quarter, it reported adjusted EPS of 23 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Total revenues of $523.5 million missed the consensus mark of $524 million by 0.1% and declined 2.1% year over year. The quarter’s adjusted revenues (excluding advertising funds revenues) fell 1.6% to $423.1 million.
The Wendy's Company Price, Consensus and EPS Surprise
The Wendy's Company price-consensus-eps-surprise-chart | The Wendy's Company Quote
Same-restaurant sales at international restaurants (excluding Argentina) rose 2.3% year over year (in-line with our expectation) compared with 3.2% a year ago.
Comps at global restaurants decreased 2.1% against an increase of 0.9% in the prior-year quarter. Comps in the United States registered a 2.8% year-over-year decline against an increase of 0.6% in the year-ago quarter.
In the quarter under review, Wendy’s inaugurated 74 restaurants globally.
WEN's System-Wide Sales Discussion
In the reported quarter, global system-wide sales, including company-operated and franchise restaurants, declined 1.1% year over year. System-wide sales in the United States declined 2.6% year over year, while the International segment increased 8.9%.
Operating Highlights of Wendy’s
In the quarter under review, the U.S. company-operated restaurant margin was 14.8%, down 50 basis points year over year. The downtrend was due to commodity inflation, a decline in traffic and labor rate inflation. However, this was partially offset by an increase in average check and labor efficiencies.
General and administrative expenses were up 6.9% year over year to $68.2 million from $63.8 million. This upside was caused by an increase in employee compensation and benefits, including investments in resources to support technology and operations initiatives.
Quarterly operating profit amounted to $83.1 million, up 2.3% from the year-ago level.
Net income was $39.2 million, down 6.7% from $42 million in the year-ago quarter.
Adjusted EBITDA totaled $124.5 million, down 2.6% from $127.8 million in the prior-year quarter. Our estimate for the metric was $125.1 million.