Wendy’s shares jumped Wednesday after the company reported that its U.S. sales are rebounding from the crippling loss of business during coronavirus shutdowns.
After plunging in March and the first two weeks of April, the company’s U.S. same-stores sales fell only 2.1% last week.
Shares of the company rose 5% in trading Wednesday.
Here’s what the company reported for the quarter ended March 29:
The burger chain reported fiscal first-quarter net income of $14.44 million, or 6 cents per share, down from $31.89 million, or 14 cents per share, a year earlier.
Excluding items, Wendy’s earned 9 cents per share.
Net sales fell 1% to $405 million.
Wall Street anticipated earnings per share of 10 cents on revenue of $414.4 million, based on a survey of analysts by Refinitiv. However, it’s difficult to compare reported earnings to analyst estimates as the coronavirus pandemic makes earnings impact difficult to assess.
Wendy’s U.S. same-store sales were flat for the quarter, after March’s decline of 7.7% erased earlier months’ same-store sales growth. U.S. same-store sales hit their low point in the week ended April 5, plunging 25.8%. But in the latter half of the month, same-store sales declines in Wendy’s home market shrank.
Executives said that better weather and the lifting of shelter-at-home orders is boosting sales in recent weeks.
Even as more consumers eat breakfast at home, Wendy’s breakfast, which launched nationwide in early March, accounted for 8% of sales in April. The company stopped ads that focused only on breakfast to support franchisees in other ways. Wendy’s was originally slated to spend $70 million to $80 million in 2020 promoting the breakfast menu.
“It provides some comfort for folks at a time when they’re looking for comfort, and that really bodes well for the future,” CEO Todd Penegor told analysts on the conference call.
Wendy’s, like Chipotle and Starbucks, has also seen more customers using its mobile app or ordering for deliveries. U.S. digital orders accounted for 5.5% of sales in the quarter.
While Wendy’s U.S. sales are starting to recover, the pandemic is starting to weigh on the company’s supply chain. A Stephens study estimated that about 18% of the chain’s U.S. restaurants have removed beef from online menus as virus outbreaks force meatpacking plants to slow production or shutter temporarily.
As some restaurants cope with beef shortages, Penegor said that the company is temporarily shifting marketing to focus on its chicken products.
Wendy’s international business has also showed signs of improvement, although 25% of those locations were closed as of the beginning of this week. International same-store sales plummeted 39.1% in the week ended April 12. Two weeks later, same-store sales had fallen 23.6%.
Wendy’s locations that have been closed more than a week are not included in its same-store sales results.
To preserve cash, the company cut its quarterly dividend from 12 cents to 5 cents and has identified $30 million in potential cost savings from slashing business travel, delaying restaurant remodels and other general and administrative expenses. Wendy’s said it has $365 million in cash on hand, as of the start of this week.