MCD McDonalds Corp

By Julie Jargon 

McDonald's Corp.'s fourth-quarter profit and revenue soundly beat analysts' expectations, as the company's move to all-day breakfast helped drive the best quarterly results in the U.S. in nearly four years.

Signs that a turnaround under Chief Executive Steve Easterbrook was beginning to take hold emerged in the third quarter, when McDonald's U.S. division posted its first quarterly increase in same-store sales in two years. That momentum continued into the fourth quarter with the launch of breakfast all day in early October--the company's biggest strategic change since it rolled out McCafe beverages nationwide in 2009.

Investors expected all-day breakfast to boost sales, but not this much. Sales at U.S. restaurants open at least 13 months jumped 5.7% in the fourth quarter--far above the 2.7% growth analysts were expecting and the best same-store sales results in the U.S. in 15 quarters. Globally, same-store sales rose 5%, while analysts were expecting growth of 3.2%.

McDonald's shares rose 1.8% to $120.51 in early trading.

Mr. Easterbrook called the fourth-quarter results "a testament to the swift changes we made and the early impact of our turnaround efforts" and said he expects the momentum to continue.

Mr. Easterbrook, who became CEO last March, has enacted numerous changes at a burger chain that had been struggling to remain relevant with consumers. He has pared down the menu, provided customers with more transparency about how its food is made, raised wages for workers at company-owned stores and announced that the company will switch to antibiotic-free chicken and cage-free eggs in the U.S. He also has made structural and management changes aimed at giving local markets more autonomy over the food they serve so they can meet local taste preferences.

Mr. Easterbrook also staved off pressure to spin off the Oak Brook, Ill., company's vast real estate holdings, announcing plans instead to return more cash to shareholders, reduce spending and sell about 4,000 company-owned restaurants to franchisees by the end of 2018.

Earlier this month, the company introduced a new value menu that it expects to help solve problems it's had finding the right price offerings for customers. Its new "McPick 2" menu allows customers to pick a pair of items for a total of $2 from among four choices: mozzarella sticks, small fries and the McDouble and McChicken sandwiches.

"McDonald's U.S. business begins 2016 as a customer-led organization focused on delivering outstanding customer service through comprehensive simplification efforts, core menu enhancements and a compelling everyday national value platform. Generating sustained, positive guest traffic remains a top priority for the segment," the company said.

Overall, McDonald's posted a profit of $1.21 billion, or $1.31 a share, up from $1.1 billion, or $1.13 a share, a year earlier.

Revenue declined 3.5% to $6.34 billion.

Analysts projected $1.23 in per-share profit on $6.22 billion in revenue, according to Thomson Reuters.

Lisa Beilfuss contributed to this article.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

January 25, 2016 10:36 ET (15:36 GMT)

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