Wendy’s Tumbles as Earnings Impacted by Higher Commodity and Labor Costs
2022.05.11 18:12
By Sam Boughedda
Investing.com — The Wendy’s Co (NASDAQ:WEN) reported its first-quarter earnings on Wednesday, missing estimates after rising inflation resulted in higher costs and reduced customer spending.
Revenue for Q1 increased 6.2% compared to the prior year. However, the restaurant missed expectations of $497.91 million, posting revenue of $488.64 million. Meanwhile, the fast-food chain posted earnings per share of $0.17, below forecasts of $0.18.
The company stated the decrease in profit resulted from higher general and administrative expenses, with company-operated restaurant margin falling due to higher commodity and labor costs, customer count declines, and the impact of the company’s investments to support its entry into the UK market.
“We are well positioned to win in this volatile environment, with strong franchisee alignment behind our strategies, and have strengthened our balance sheet with the successful debt raise transaction we recently completed,” said Wendy’s President and CEO Todd Penegor.
The company also declared a quarterly cash dividend of 12.5 cents per share, payable on June 15th.
Wendy’s sees global systemwide sales growth of between 6% and 8% in 2022, with adjusted earnings per share for the year predicted to be between $0.82 and $0.86.
Wendy’s stock tumbled Wednesday. At the time of writing, it is down 8.8% at $16.50.
