Key Wendy's metric beats estimates; stock rises

Wendy's, the No.3 U.S. burger chain, reported better-than-expected same-restaurant sales for the first quarter and said it planned to sell its bakery operations in the current quarter.

Shares of the company, known for its square beef burgers and thick "Frosty" milkshakes, rose about 6 percent in premarket trading on Wednesday.

Wendy's Co. signage is displayed outside of a restaurant in Torrance, California.
Patrick T. Fallon | Bloomberg | Getty Images

Wendy's said same-restaurant sales rose 3.2 percent in the quarter ended March 29. Analysts on average had expected a 2.5 percent rise, according to Consensus Metrix.

The company also raised the number of U.S. restaurants it plans to sell to franchisees this year to 280 from 225.

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Wendy's, like other burger chains including McDonald's and Burger King, has been selling many company-owned restaurants to franchisees to cut costs and boost cash flow and margins.

Wendy's sold 240 restaurants to franchisees in the first quarter.

The company's net income fell to $27.5 million, or 7 cents per share, from $46.3 million, or 12 cents per share, a year earlier, due to the sale of restaurants.

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Excluding items, Wendy's earned 6 cents per share.

Total sales fell about 11 percent to $466.2 million.

Analysts on average had expected earnings of 5 cents per share and sales of $475.6 million, according to Thomson Reuters.

Wendy's also said it replaced its $1.3 billion credit facility with a $2.28 billion facility.

The company reaffirmed its adjusted profit forecast for 2015 and said it would update the forecast on June 3 to reflect the expected impact of debt refinancing, its anticipated share buyback program and the planned sale of its bakery operations.

Wendy's shares were trading at $11.05 before the bell.