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Share Name | Share Symbol | Market | Type |
---|---|---|---|
McDonalds Corp | NYSE:MCD | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-2.78 | -1.02% | 270.4998 | 274.62 | 268.89 | 274.14 | 2,642,345 | 01:00:00 |
By Julie Jargon And Chelsey Dulaney
McDonald's Corp. reported disappointing results for the first full quarter under Chief Executive Steve Easterbrook, as U.S sales fell more than expected despite new promotions and other turnaround initiatives in its critical home market.
Sales at U.S. stores open at least 13 months fell 2% in the three months through June, compared with the 1.5% drop analysts polled by Consensus Metrix had expected. Global same-store sales slipped 0.7%, worse than the 0.4% decline Consensus Metrix had forecast.
McDonald's net profit sank 13% in the quarter.
Mr. Easterbrook, who became CEO on March 1, has made a number of changes to try to revive a business that has been losing customers to fast casual outlets and rival fast food chains, including eliminating antibiotics from chicken, introducing better burgers, adding customizable options and emphasizing the freshness of its ingredients. McDonald's also has recently debuted new lemonades, Sirloin burgers and Artisan grilled chicken sandwiches.
But McDonald's said recent products and promotions, such as the sirloin burgers, didn't achieve the expected consumer response.
"We believe trends are improving and change is happening faster at McDonald's than it has in the past," RBC Capital Markets analyst David Palmer said in a research note. "That said, this change is driving a gradual improvement rather than a 'big bang' to sales."
Mr. Easterbrook acknowledged that the quarterly results were "disappointing," but said "we are seeing early signs of momentum." He said he expects McDonald's to post positive global same-store sales in the third quarter.
In a statement, he said McDonald's will continue to work on simplifying its menu and testing all-day breakfast service. McDonald's has been testing all-day breakfast in some markets, the results of which have been encouraging, according to a memo reviewed by The Wall Street Journal, which said franchisees are preparing to roll it out nationwide as soon as October, pending a vote. Mr. Easterbrook didn't give any timeframe for a broad rollout.
McDonald's also has been struggling in Asia, where food-safety concerns have scared off many customers. In its division that includes Asia, same-store sales in the quarter fell 4.5%. Europe was the one bright spot, where same-store sales increased 1.2%.
McDonald's reported a profit of $1.2 billion, or $1.26 a share, down from $1.39 billion, or $1.40 a share, a year earlier. Revenue slid 9.5% to $6.5 billion. Analysts polled By Thomson Reuters had forecast $1.23 a share in earnings and $6.45 billion in revenue.
McDonald's has announced some structural moves to improve results, such as selling thousands of restaurants to franchisees and cutting $300 million in costs. Analysts have asked McDonald's if it plans to do something more dramatic, such as spinning off some of its real estate, which the company said it has explored in the past.
McDonald's Chief Financial Officer Kevin Ozan stated in the earnings release that McDonald's continues to "evaluate additional ideas to further drive shareholder value through actions that deliver sustainable long-term growth."
Write to Julie Jargon at julie.jargon@wsj.com and Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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