Wendy’s Misses Forecast, Shares Tumble

by Christopher Freeburn | May 8, 2012 1:11 pm

Wendy’s (NASDAQ:WEN[1]) on Tuesday morning announced first-quarter earnings of $12.4 million, up from a $1.4 million loss last year. Adjusted EPS for the quarter was 1 cent, which disappointed analysts[2] who had predicted 3 cents, the Associated Press noted.

Investors didn’t like the results, sending Wendy’s shares plunging more than 5% in Tuesday midday trading.

The company posted first-quarter revenue of $593.2 million, up 2% from $582.5 million in 2011, but missing analysts’ forecast of $608.1 million. The burger chain also lowered its forecast for the remainder of the year, reducing projected earnings from a range of $335 million to $345 million to a range of $320 million to $335 million.

Company officials called 2012 a “transition year” and said Wendy’s would continue to update its menu[3] and renovate[4] its 6,581 restaurants. During the quarter, revenue from existing restaurants edged up just 0.8%, while franchise restaurants saw a 0.7% rise in revenue.

Wendy’s blamed rising beef costs and too-low pricing on its “W” Cheeseburger for cutting its margins.

Last month, burger chain archrival McDonald’s (NYSE:MCD[5]) reported increased profits and sales[6] in line with analysts’ expectations.

  1. WEN: http://studio-5.financialcontent.com/investplace/quote?Symbol=WEN
  2. disappointed analysts: http://www.usatoday.com/money/companies/earnings/story/2012-05-08/wendys/54826378/1
  3. update its menu: https://investorplace.com/2012/04/wendys-introduces-3-more-side-dishes/
  4. renovate: https://investorplace.com/2011/12/wendys-facelift-helps-dethrone-burger-king/
  5. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  6. increased profits and sales: https://investorplace.com/2012/04/mcdonalds-q1-earnings-meet-expectations/

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