A Wendy’s food order is prepared at the Rebel Foods Ltd. cloud kitchen in Noida, India, on Friday, March 12, 2021.
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Wendy’s bet on breakfast is paying off as the fast-food chain on Wednesday reported better-than-expected earnings and raised its forecast for the year.
Wendy’s shares were recently down more than 2%, as stocks in the broader market slumped. After its earnings were released, the stock had risen more than 5%.
It now expects adjusted earnings of between 72 cents and 74 cents per share, compared with previous estimates of adjusted earnings between 67 cents and 69 cents per share.
The company has spent $3.5 million on advertising to promote its breakfast items. It expects both its business abroad and its breakfast menu to see improving sales ahead.
“We could not be more pleased with the momentum in our business that continued in the first quarter of 2021 as sales significantly exceeded our expectations and fueled our restaurant economic model, leading to outsized profits,” President and Chief Executive Todd Penegor said on the earnings call.
In the first quarter, Wendy’s reported net income rose to $41.4 million, or 18 cents a share, up from $14.4 million, or 6 cents a share, a year ago.
On an adjusted basis, Wendy’s earned 20 cents per share, topping average analyst estimates of 15 cents a share, published in a Refinitiv survey.
Revenue rose to $460.2 million from $405 million a year ago. That also was higher than the $444 million analysts had predicted.
The restaurant chain’s global same-store sales rose 13% from a year ago.
Wendy’s said a recently launched chicken sandwich sold very well during the quarter.
“The strength of the Classic Chicken, along with the success of the Jalapeno Popper, has allowed us to compete very well in the chicken sandwich category. In fact, our share of breaded chicken sandwiches within QSR grew in the month of March, despite significant competitive activity,” Penegor said.
Wendy’s repurchased $56 million worth of stock in the first quarter and increased its share repurchase authorization by $50 million to $150 million.