Industry News | October 22, 2015

McDonald's Sees 1st Quarterly Sales Increase in 2 Years

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McDonald's Corporation announced results for the third quarter ended September 30, 2015.
"Consumers have more choices than ever about where to dine, and our operational growth-led turnaround is focused on appealing to customers in the areas that matter most to them—great-tasting, high-quality food; convenience; and value," says McDonald's president and chief executive officer Steve Easterbrook. "I am encouraged by our operating performance for the quarter, with positive comparable sales across all segments, including the U.S., as well as sales recovery in China following the prior year supplier issue. I am confident in the fundamental strength of the McDonald's System and our ability to drive initiatives that are focused on delivering the greatest benefit for our customers."
The following third quarter results included a benefit from comparison to the 2014 China supplier issue:

·      Global comparable sales increase of 4.0 percent, reflecting positive comparable sales in all segments

·      Consolidated revenues decrease of 5 percent (increase of 7 percent in constant currencies)

·      Consolidated operating income decrease of 2 percent (increase of 10 percent in constant currencies)

·      Diluted earnings per share of $1.40, an increase of 28 percent (44 percent in constant currencies), due in part to a benefit from comparison to the prior year's increase in tax reserves related to certain foreign tax matters

In addition, the Company returned $3.1 billion to shareholders through share repurchases and dividends. This brings the year-to-date return to shareholders to$7.1 billion against the targeted return of $8–$9 billion in 2015.
In the U.S., third-quarter comparable sales increased 0.9 percent, the segment's first quarterly comparable sales increase in two years. The introduction of the new Premium Buttermilk Crispy Chicken Deluxe sandwich and breakfast, including a return to the classic recipe ingredients for McDonald's iconic Egg McMuffin, contributed to the segment's performance. U.S. third quarter operating income declined 1 percentas a result of our incremental investment in wages and benefits for all eligible Company-operated restaurant employees, which is designed to improve restaurant performance and enhance the employer brand. Moving forward, rebuilding customer traffic remains a top priority for the segment.
Comparable sales for the International Lead Markets segment increased 4.6 percentfor the third quarter led by strong performance in Australia, the U.K., and Canada, and positive results in Germany. Third-quarter operating income decreased 11 percent(increased 5 percentin constant currencies). Positive consumer response to multiple menu, service and value initiatives throughout most of the segment contributed to the segment's performance.
In the High Growth Markets segment, third-quarter comparable sales increased 8.9 percent,reflecting very strong comparable sales performance in China and positive performance in most other markets. Operating income increased 39 percent(68 percentin constant currencies). Emphasis on value and breakfast during the quarter contributed to China's sales recovery.
"Third quarter marked an important step in the Company's global turnaround—the reorganization of our business from a geographically focused structure to business segments that combine markets with similar characteristics and opportunities for growth,” Easterbrook says. “As we begin fourth quarter, comparable sales are expected to be positive in all segments. While still in the early stages, we believe our turnaround plan is starting to generate the change needed to reposition McDonald's as a modern, progressive burger company."

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.

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