McDonald's Earnings Top Expectations--2nd Update
October 21 2016 - 10:55AM
Dow Jones News
By Anne Steele
McDonald's Corp. reported better-than-expected earnings and
solid growth in same-restaurant sales for the September quarter,
helped in part by the continued popularity of its all-day breakfast
and the introduction of new chicken nuggets.
Shares in the company added 2.5% to $113.32 in morning trading
in New York, as investors signaled relief amid speculation the
benefit from all-day breakfast was fading. Through Thursday's
close, the stock had been steadily dropping since May's high of
$131.96, shedding 16% since then -- including 3.1% this week.
Sales at existing restaurants rose 3.5% in the period, handily
beating the consensus estimate of 1.5% growth in a survey of
analysts by Consensus Metrix. In the U.S., comparable sales
increased 1.3%, just above the 1.2% growth anticipated by analysts.
All-day breakfast and the introduction of chicken nuggets with no
artificial preservatives helped power domestic sales, despite
"continued industry softness."
International sales, meanwhile, grew 3.3%, beating analysts'
views of 1.8%. Overseas sales were led by a "strong performance in
Japan," McDonald's said.
Since taking the helm last March, Chief Executive Steve
Easterbrook has moved to bolster the company's sales by paring down
its menu, offering more transparency about how its food is made and
launching all-day breakfast at many of its domestic restaurants.
That move initially fueled stronger growth and higher traffic, but
impact has since dwindled.
On Friday, Mr. Easterbrook said the company is focused on
growing global comparable sales "while being mindful of the
near-term challenges in several markets."
In all for the September quarter, McDonald's reported a profit
of $1.28 billion, down from $1.31 billion a year earlier. Per-share
earnings rose a dime to $1.50, boosted by a lower share count but
hurt by a restructuring charge of 12 cents and currency headwinds
of 3 cents. Analysts had projected $1.48 in per-share earnings.
Revenue slipped 2.9% to $6.42 billion, dragged by refranchising.
Analysts had expected revenue of $6.28 billion.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
October 21, 2016 10:40 ET (14:40 GMT)
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