News

Wendy's reports steady sales growth for FY2018

February 21, 2019

Wendy's saw healthy systemwide sales growth for the last quarter and full year of 2018, reporting systemwide global sales growth for the quarter that ended Dec. 30, of 1.9 percent, with 2.5 percent growth in systemwide sales for the year, a news release said. Quarterly, that figure is down from the previous year, though. On a fiscal year basis, the company sales grew half a percentage more than in 2017, when they rang in at just 2 percent annual systemwide sales growth. 

Other key financial highlights include: 

• Total global net store openings of 42 for the quarter, compared to 48 in Q4 2017.
• Total global net store openings of 77 for FY2018, compared to 97 in 2017. 
• Global Q4 2018 systemwide sales of $2,597,000, compared to $2,568,000 the previous year. 
• Global FY 2018 systemwide sales off $10,513,000 compared to $10,283,000 the previous year. 
• Total Q4 2018 revenues were $397.8 million versus $383.9 million the previous year's quarter. 
• Fiscal year 2018 revenues 1.589 billion this year versus 1.532 billion in 2017. 
• Operating profit for this year's quarter was $45.8 million versus $58 million last year's quarter. 
• FY 2018 operating profit was 249.9 million versus $195.7 million the previous fiscal year. 

"Our resilient business model generated significantly higher cash in 2018, and we continued to reward shareholders by returning $350 million through dividends and share repurchases,"Wendy's.President and CEO Todd Penegor said in the release.

"In 2019 we will continue to build our foundation for growth by executing a balanced marketing approach that resonates with today's consumer, driving operational excellence across the organization, investing in our consumer-facing digital capabilities and further developing our global growth strategy."

The increase in fiscal year revenues and adjusted revenues was attributed primarily to an increase in sales at company-operated restaurants, driven by an increase in the number of restaurants operating and positive same-restaurant sales. But company-operated restaurant margin dropped, primarily due to labor rate and commodity inflation and higher insurance costs, partially offset by pricing actions.

The company said the fiscal year increase in net income resulted primarily from the sale of its ownership interest in Inspire Brands for $450 million, as well as year-over-year decreases in system optimization related expenses, and adjusted EBITDA growth. 

The look forward

Wendy's leadership said this year the company will put an incremental $25 million into the chain's digital initiatives to build a stronger foundation across its digital platforms to support an acceleration of its initiatives. 

Wendy's will put approximately $15 million into previously announced initiatives like a partnership with a best-in-class global consulting firm to modernize digital platforms. Wendy's will also make a one-time investment of approximately $10 million in digital scanning equipment on behalf for the North American system to support its customer experience. 

Also in the current year, Wendy's expects: 

• Global systemwide sales growth of approximately 3 to 4 percent.
• General and administrative expense of approximately $195 million.
• Adjusted EBITDA growth of approximately 2.5 to 4.5 percent.
• Adjusted tax rate of approximately 22 to 23 percent.
• Adjusted earnings per share growth of approximately 3.5 to 7.0 percent.

The company said it also is reaching for a goal of $11.5 billion in systemwide global sales this year.