McDonald's Profit Climbs Above Expectations
April 22 2016 - 8:10AM
Dow Jones News
McDonald's Corp. reported a jump in first-quarter profit that
easily topped expectations as all-day breakfast continued to
attract customers—more evidence that the company's turnaround
efforts are paying off.
Shares rose 1.8% to $128 in premarket trading.
Sales at McDonald's U.S. restaurants open at least 13 months
rose 5.4%, topping the 4.6% clip analysts expected and slowing just
slightly from the fourth quarter's strong 5.7% pace. All-day
breakfast continued to power domestic sales, the company said.
Meanwhile, international sales rose 5.2% from a year earlier,
pushing global comparable-store sales 6.2% higher during the
period.
Global comparable-store sales 6.2% higher during the period,
aided by an extra day thanks to leap year. McDonald's has been
betting big on China, looking to make it its No. 2 market. Sales at
existing stores there rose 3.6% in the March quarter as the company
recovered from a supplier problems and won customers and opened new
restaurants.
Since taking the helm last March, Chief Executive Steve
Easterbrook has moved to breathe life into the fast-food chain's
sales by paring down its menu, offering more transparency about how
its food as made and launching all-day breakfast at thousands of
domestic restaurants.
"The turnaround plan we announced last year is grounded in
enhancing these critical customer-driven elements," Mr. Easterbrook
said Friday, adding that "our turnaround is taking hold."
Evidence that a turnaround was gaining traction emerged late
last year, when McDonald's logged its best U.S. quarterly sales in
nearly four years. The CEO has said the initial boost from the
expanded breakfast menu hours would eventually moderate.
In all for the quarter, McDonald's reported a profit of $1.1
billion, or $1.23 a share, up from $811.5 million, or 84 cents, a
year earlier.
Revenue edged 0.9% lower to $5.9 billion. The decline was on
account of adverse exchange rates that hurt international sales.
Stripping out currency volatility, sales rose 3%.
Analysts had projected $1.16 in earnings per share on $5.82
billion in sales, according to Thomson Reuters.
At the end of the quarter, McDonald's counted roughly 36,500
restaurants systemwide, up 0.5% from a year earlier. The company
said it expects net additions of about 500 stores this year, and
that those additions will add about 1% to currency-adjusted 2016
systemwide sales growth this year.
Longer term, McDonald's is looking to refranchise about 4,000
restaurants through 2018 with a goal of becoming 95%
franchised.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
April 22, 2016 08:55 ET (12:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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