Wendy’s Co (NASDAQ:WEN) shares climbed 4.3% in premarket trading after the restaurant chain reported first-quarter earnings ahead of Wall Street forecasts, despite continued weakness in its domestic operations.
Revenue and earnings beat analyst forecasts
The fast-food company posted adjusted earnings per share of $0.12, exceeding analyst expectations of $0.10 per share.
Quarterly revenue came in at $540.6 million, above the consensus estimate of $520.48 million and representing a 3.3% increase compared with the same period last year.
Despite the stronger-than-expected financial results, global systemwide sales declined 5.5% to $3.2 billion during the quarter. The drop was largely linked to a 7.8% fall in same-restaurant sales across the United States.
International markets provided some support, with global systemwide sales outside the U.S. increasing 6.0%.
Company maintains full-year outlook
Wendy’s reaffirmed its financial guidance for full-year 2026, forecasting adjusted earnings per share between $0.56 and $0.60. The midpoint of the range, $0.58 per share, matches current analyst expectations.
The company also said it expects broadly flat global systemwide sales growth for the year and projected adjusted EBITDA between $460 million and $480 million.
“We are taking decisive action to strengthen the Wendy’s system and improve performance,” said Ken Cook, Interim CEO. “While our first quarter results reflect a business in the early stages of a turnaround, we are making progress to improve our U.S. business and are confident in the direction we are heading.”
Margins pressured by inflation and weaker traffic
Margins at company-operated restaurants in the United States fell sharply during the quarter, with restaurant margin declining 340 basis points to 11.4%.
The company said profitability was affected by softer customer traffic, rising commodity costs and continued labour inflation.
Adjusted EBITDA declined 10.6% year-on-year to $111.3 million, compared with $124.5 million in the same quarter last year.
Wendy’s expands focus on international growth
Wendy’s also announced a new franchise agreement aimed at opening up to 1,000 restaurants across China over the next decade, highlighting the company’s focus on international expansion.
During the quarter, Wendy’s opened 50 net new restaurants globally, although the U.S. business recorded 164 net closures.
The company additionally declared a quarterly dividend of $0.14 per share, scheduled to be paid on June 15.