Wendy's posts loss on refinancing; sales figure up
NEW YORK — The Wendy's Co. lost money in the second quarter because of costs to refinance debt. But a key sales figure rose as it worked to reinvent itself as a higher-end hamburger chain.
The Dublin, Ohio-based fast-food company says sales at restaurants open at least 15 months rose 3.2 percent for the quarter, helped by remodeled locations and new menu items such as the Spicy Guacamole Chicken Club sandwich.
The metric is a key gauge because it strips out the impact of newly opened and closed locations.
Wendy's has been on a mission to revive its business since it hired CEO Emil Brolick last September. But the push hit an early snag in the first quarter, when the company said its marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to adjust its marketing message.
In the latest quarter, Wendy's said its new ad campaign helped drive sales.
The company stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.
The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more-profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.
For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.
Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.
Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.
Wendy's shares rose 18 cents, or 4 percent, to $4.54 in premarket trading.
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