Wendy's Withdraws Financial Estimates and Suspends Share Buyback

Burger chain Wendy's withdrew its 2020 and long-term guidance in response to the coronavirus pandemic.
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Wendy's  (WEN) - Get Report on Thursday said it withdrew its 2020 and long-term guidance and suspended share repurchases as the fast-food chain contends with "unprecedented global market and economic conditions" brought on by the coronavirus pandemic.

Shares of the Dublin, Ohio, restaurant operator at last check were down 2.9% to $14.

"Due to the current unprecedented global market and economic conditions in the U.S. and around the world, the company is withdrawing its outlook for the 2020 fiscal year that was issued on February 26, 2020 and its 2021-2024 long-term outlook that was provided at its Investor day in October 2019," Wendy's said in a statement. 

"The company has suspended all share repurchase activity."

The company said it planned to update investors and analysts on its financial results during its first-quarter-earnings call and provide an updated financial outlook "when it can reasonably estimate the impact of the Covid-19 outbreak and changing market conditions."

Wendy's said it had drawn down $120 million under its revolving financing facility of variable funding senior secured notes and now has more than $340 million in cash on hand. 

The increased borrowing was taken as a precaution, given the uncertain market conditions arising from Covid-19, the company said.

Wendy's said that for the week ended March 22, same-restaurant sales turned down 20%. For the quarter-to-date, same-restaurant sales are up 2.8% after the breakfast launch increased sales 15% in its first week. 

With dining rooms, Wendy's operates with drive-through and digital ordering at most of its restaurants. Drive-through accounts for 90% of the company's overall sales mix. Roughly 3.5% of all system restaurants are closed, 46 in the U.S. and 189 internationally.

The company's digital business increased to 4.3% of sales compared with 2.5% of sales in 2019, driven by strong growth in its delivery business.

Wendy's said it intended to remove its incremental breakfast-marketing spending investment in 2020 and support its franchise system in other ways.