Operations

Wendy's Q1 earnings fall short amid COVID-19 impact

Wendy's

May 6, 2020

Wendy's Co. reported that adjusted earnings fell to 9 cents a share in the first quarter, as the COVID-19 pandemic forced the hamburger chain to switch to drive-thru and pickup service, blunting the momentum of a strong financial quarter. 

The adjusted earnings missed Wall Street estimates by a penny. 

"I am very proud of the significant momentum our business generated in 2019 and carried into March of 2020, prior to the negative impact of COVID-19," Todd Penegor, president and CEO of Wendy's said the report. "Our U.S. breakfast launch in early March exceeded our initial expectations and breakfast daypart continues to perform well in today's environment, which is encouraging."

Net income for the quarter plummeted from $31.9 million or 14 cents per share last year to $14.4 million or 6 cents a share for the quarter, according to the filing with the Securities and Exchange Commission. 

Though the popularity of some of its recently launched breakfast items helped bolster sales, the company said overall its massive investment in that return to the breakfast day-part pulled down quarterly profit. U.S. same-store sales for the period were flat, largely due to a drag-down from the transition to a delivery and carryout only model imposed by pandemic restrictions on restaurants during the quarter. 

Other key Q1 highlights include: 

• 12.2% drop in adjusted EBITDA to $89.3 million from $101.7 million last year's quarter.
• 0.9% decrease in revenues to $405 million from $408.6 million last year's quarter.
• 0.5% drop in adjusted revenues quarter-year over quarter-year, to $326.4 million.

The company said it lowered it dividend to 5 cents per share, as a result of the previously unanticipated sales misses of the first quarter due to COVID-19 business restrictions on operations. Since the close of Q1, Wendy's said its global same-restaurant sales through April 26 were down 9.9%, which is inclusive of a 23.6% drop internationally and 8.5% drop in the U.S.