By Lisa Beilfuss 

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 08:49 ET (12:49 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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