Hurricanes blow against Wendy's in Q3
Nov. 8, 2017
by MEAT+POULTRY Staff
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The chain will change its projections for the rest of 2017.
DUBLIN, Ohio – Wendy’s reported lower numbers than expected in its third-quarter profit and sales on Nov. 8, due in part to the hurricanes in the US during August and September. Texas and Florida restaurants were greatly impacted by the natural disasters.
Net income in the fiscal third quarter was $14.3 million down from $48.9 million in 2016. Adjusted EBITDA from continuing operations decreased from $100.2 million in 2016 to $96.9 million in the third quarter of 2017.
Revenues for Q3 were $308 million, down from $364 million in Q3 2016, a decrease of 15.4 percent. The company said the decline resulted primarily from 249 fewer Company-operated restaurants at the end of 3Q 2017 compared to the beginning of 3Q 2016, partly offset by higher franchise royalty revenue and franchise rental income.
For the quarter, ended Oct. 1, 2017, same-restaurant sales in North America rose 2 percent. That is up from 1.4 percent in 2016.
All these factors led the burger chain to change it adjusted EPS forecast to a range of $0.43 to $0.45 per share for the full year from its previous forecast of $0.45 to $0.47.
Still, Wendy’s remains optimistic about its overall financial plan.
"We have now recorded 19 consecutive quarters of positive same-restaurant sales, a streak that is unmatched in the current QSR hamburger category and speaks to the strength and relevance of our brand," Todd Penegor, president and CEO, said in a statement. "We also remain encouraged by the progress being made on our global footprint expansion with 110 year-to-date openings, which is almost 30 restaurants ahead of our pace at this point in 2016."
Wendy’s reported a 41.9 percent decrease in operating profit from $106.1 million in Q3 2016 to $61.7 million in the third quarter of 2017.
“As we lap the effects from system optimization, our improved quality of earnings continues to provide positive benefits through significantly increased cash flows and resiliency in our bottom line,” Penegor said. “Our relentless focus on executing every element of The Wendy's Way by providing food our customers love, friendly service, value, and an inviting atmosphere will continue to drive growth in the future."