Wendy’s same-resto sales drop burns shares

NEW YORK — Wendy’s Co. on Tuesday reported quarterly sales at established outlets in North America below analyst estimates and lowered its same-store sales forecast for the year, as the burger chain struggles to lure customers in a fiercely competitive US fastfood industry.

Wendy’s, much like its peers, has had to offer cheaper items with added promotions to get people to buy more products.

But its efforts are not bearing fruit, as the company reduced its same-store sales growth forecast for 2018 to about 1% from a previous range of 2-2.5%.

The company’s shares fell 5.8% to $16.05 in after-market trading. They have gained 4% this year.

Wendy’s has launched a slew of promotions including “4 for $4,” discounted Baconator Fries and a 50-cent Frosty dessert that compete with bundled meals offered by McDonald’s $1, $2, $3 menu and Taco Bell’s dollar menu.

Customers have a large range of cheap fastfood options from many chains and keeping sales robust is becoming challenging for many big outlets.

Wendy’s same-restaurant sales in North America fell 0.2% in the quarter. Analysts on average had expected same-store sales to rise 1.84%, according to IBES data by Refinitiv.

Net income rose to $391.2 million, or $1.60 per share, in the third quarter, from $13.7 million, or 5 cents per share, a year earlier. Excluding certain items, the company earned 17 cents per share, beating analysts’ average estimate of 15 cents per share.

Revenue rose 2.4% to $400.6 million, missing expectations of $405.36 million.

Franchisee royalty and franchisee rental revenue, which contribute to about 38% of the company’s net sales, rose 3% to $153.7 million in the third quarter. —