Investors Didn’t Expect This From The Wendy’s Company (NASDAQ:WEN)

Posted by Lynn Eisler November 8, 2013 0 Comment 877 views


The second-largest U.S. hamburger chain, The Wendy’s Company (NASDAQ:WEN) yesterday reported its 3Q13 results for the quarter ended September 29, 2013. The company reported lower than expected 3Q13 revenues of $640.8 million, moderately 1% more compared to 3Q12 revenues of $636.3 million, but miss the street estimate of $643.4 million. Net loss during 3Q13 narrowed to $1.9 million, almost a breakeven ($0.00) on a per share basis compared to $0.07 per share or $26.2 million in 3Q12. Negative $28.3 million year over year variance in provision for income taxes, negatively affected company’s reported net loss. Adjusted EBITDA increased 17% compared to 3Q12.

The Wendy’s North America same-store sales, for company operated restaurants, increased 3.2% compared to 2.7% in 3Q12. Parallel to this, Franchise same-store sales increased 3.1% compared to 2.9% in 3Q12. North America margin for company operated restaurant was 15.6% compared to 13.9% last year. The increase resulted from favorable sales mix, lower paper and beverage costs. However it was partly offset by increase in commodity costs. Adjusted earnings were $0.08 per share in 3Q13, compared to $0.02 last year and also beat the street estimates of $0.06 per share by 2 cents.

The President and Chief Executive Officer of The Wendy’s Company (NASDAQ:WEN), Emil Brolick said, “”Our third-quarter two-year Company-operated same-store sales increase of 5.9 percent was our strongest comp growth since 2005, driven by the highly successful Pretzel Bacon Cheeseburger promotion.”

Moreover the CEO also mentioned about solid response to Wendy’s Pretzel Pub Chicken sandwich promotion in October. The company raised its Adjusted EBITDA outlook for FY13 to $365 million and adjusted earnings to about $0.25 per share, following the strong 3Q13 results.

Despite positive future outlook and better than expected adjusted earnings, the stock of Wendy’s plunged over 11.44% during Thursday’s trade. Another stock to loss about 5% in the restaurant industry was Good Times Restaurants Inc. (NASDAQ:GTIM) that too reported, earlier this week, strong double digit growth of 26% in October, marking seventh consecutive month of double digit increase in same store sales.



About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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