Wendy's lowers guidance as US sales struggle

(Sharecast News) - Square burger specialist Wendy's reported a 1.8% decline in global systemwide sales in its second quarter on Friday, to $3.7bn, prompting a downgrade to its full-year guidance amid continued pressure on its US business. The fast-food chain's revised forecast now anticipated global sales to fall between 3% and 5%, compared to earlier projections of a flat to 2% decline.

Earnings per share rose 7.4% year-on-year to 29 cents, exceeding Wall Street estimates by four cents, while total revenue dipped 1.7% to $560.9m.

Operating profit rose nearly 5% to $104.3m, aided by reduced advertising and administrative costs.

Net income edged up 0.9% to $55.1m.

International sales remained a bright spot, growing 8.7% across all regions.

However, US systemwide sales fell 3.3%, driven by declining traffic and weaker same-restaurant sales.

The company cited commodity and labour inflation as contributing to a squeeze on US company-operated restaurant margins, though average spend sizes were higher.

"We have work to do to improve the overall performance of the business," said interim chief executive officer Ken Cook, who assumed the role in July.

"We will continue to strengthen relationships with franchisees, improve the effectiveness of our marketing programs, and elevate the customer experience."

Wendy's added 26 net new restaurants in the quarter and said it remained on track to deliver 2% to 3% net unit growth for the full year.

Capital spend and franchise development investments were expected to total between $165m and $175m.

Despite soft sales, the company returned $88.7m to shareholders through dividends and buybacks.

It repurchased 4.8 million shares in the quarter and declared a regular quarterly dividend of 14 cents per share, payable on 16 September.

Wendy's said it now expected adjusted earnings per share for 2025 to range between 82 cents and 89 cents, down from prior guidance of 92 cents to 98 cents.

Adjusted EBITDA was forecast between $505m and $525m, a reduction from the previous range of $530m to $545m.

At 0820 EDT (1320 BST), shares in the Wendy's Company were down 0.7% in premarket trading in New York at $9.89.

Reporting by Josh White for Sharecast.com.