May 8, 2018 / 8:38 PM / 5 months ago

Wendy's North America same-store sales miss estimates

(Reuters) - Wendy’s Co (WEN.O) reported lower-than-expected first-quarter sales at its established outlets in North America, as the burger chain struggled to attract enough diners in a fiercely competitive restaurant industry.

FILE PHOTO: A Wendy's fast food restaurant is seen in Los Angeles, California U.S. November 7, 2017. REUTERS/Lucy Nicholson/File Photo

The company’s shares were down more than 5 percent in after-market trading.

Wendy’s same-restaurant sales in North America, its biggest market, rose 1.6 percent in the reported quarter, but missed estimates for the third straight one.

Analysts on average had expected same-store sales to rise 1.8 percent, according to research firm Consensus Metrix.

The sales miss comes despite Wendy’s diverse value menu, which was launched to attract more customers to its outlets.

“Our checks indicate that Wendy’s “2 for $6” mix-and-match promotion didn’t resonate all that well during April,” Mark Kalinowski, analyst at Kalinowski Equity Research said last week.

In contrast, bigger rival McDonald’s Corp (MCD.N) reported same-store sales that topped estimates, driven by higher average check tallies that was propelled by consumers opting for $1-$3 value menu items, while also adding more expensive burgers.

Wendy’s and other fast-food chains such as McDonald’s have been battling each other with dollar menus, discounts and limited-time menu items as consumer spending cools, while also launching freshly prepared meals to attract diners.

Still Wendy’s stock has outperformed its peers so far this year. While the S&P 500 Restaurants sub index .SPLRCREST is down nearly 1 percent, Wendy’s rose 5.7 percent. In comparison, McDonald’s Corp (MCD.N) has fallen 4.3 percent so far this year.

Wendy’s said it now expects full-year adjusted earnings of about 55 cents to 57 cents per share, up from the previously announced forecast of about 54 to 56 cents per share.

Analysts on average had expected the company to post a profit of 55 cents per share, according to Thomson Reuters I/B/E/S.

Net income fell to $20.16 million, or 8 cents per share, in the first quarter ended April 1, from $22.34 million, or 9 cents per share, a year earlier.

Revenue rose about 33 percent to $380.56, beating estimates of $379.5 million.

Excluding items, the company earned 11 cents per share, topping estimates of 10 cents.

Reporting by Vibhuti Sharma in Bengaluru; Editing by Shounak Dasgupta

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