OAK BROOK, ILL. — For the first time in two years, McDonald’s Corp. reported a quarterly comparable sales increase in the United States, suggesting aggressive actions taken earlier in the year may be paying for the Oak Brook-based fast-food chain.
For the third quarter ended Sept. 30, McDonald’s had net income of $1,309.2 million, equal to $1.40 per share on the common stock, up 23% from $1,068.4 million, or $1.09 per share, for the prior-year period. Earnings benefited from comparisons to the previous year’s increase in tax reserves related to certain foreign tax matters. Excluding currency translation, net income increased 37% for the quarter.
Revenues totaled $6,615.1 million, down 5% from year-ago revenues of $6,987.1 million. Excluding currency translation, revenues advanced 7% for the quarter.
Global comparable sales rose 4% for the quarter, reflecting growth in all segments, including a 0.9% increase in U.S. comparable sales, as well as recovery in China following the prior-year supplier issue.
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| Steve Easterbrook, president and c.e.o. of McDonald’s |
“Consumers have more choices than ever about where to dine, and our operational growth-led turnaround is focused on appealing to customers in the areas that matter most to them — great-tasting, high-quality food, convenience and value,” said Steve Easterbrook, president and chief executive officer of McDonald’s. “I am encouraged by our operating performance for the quarter, with positive comparable sales across all segments, including the U.S., as well as sales recovery in China following the prior-year supplier issue. I am confident in the fundamental strength of the McDonald’s system and our ability to drive initiatives that are focused on delivering the greatest benefit for our customers.”
In the United States, third-quarter operating income declined 1% due to increased investment in wages and benefits for employees. The company credited the launch of a buttermilk crispy chicken sandwich and a return to classic recipe ingredients for the Egg McMuffin for the bump in comparable sales. Rebuilding customer traffic remains a priority.
In the International Lead Markets segment, operating income decreased 11% but increased 5% in constant currencies, and comparable sales rose 4.6%, driven by positive results in Australia, the United Kingdom, Canada and Germany.
The High Growth Markets segment posted a 39% increase in operating income (68% in constant currencies), and comparable sales increased 8.9%, reflecting strength in China and positive results in most other markets.
“Third quarter marked an important step in the company’s global turnaround — the reorganization of our business from a geographically focused structure to business segments that combine markets with similar characteristics and opportunities for growth,” Mr. Easterbrook said. “As we begin fourth quarter, comparable sales are expected to be positive in all segments. While still in the early stages, we believe our turnaround plan is starting to generate the change needed to reposition McDonald’s as a modern, progressive burger company.”
Year-to-date net income fell 9% to $3,323.1 million, or $3.49 per share, from net income of $3,660.3 million, or $3.69 per share, for the same period of the prior year. Results were negatively affected by pre-tax charges incurred during the first half of the year related to store closings and restructuring. Excluding currency translation, net income rose 1%.
Total revenues for the nine months declined 9% to $19,071.7 million from $20,869.1 million. Excluding currency translation, revenues increased 2%.
The company’s share price in morning trading on Oct. 22 was up nearly 7% from the previous close of $102.54.
