McDonald's Q2 results miss estimates
July 26, 2016
by Erica Shaffer
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OAK BROOK, Ill. – McDonald’s Corp. reported lower-than-expected profit and domestic comparable sales growth.
For the second quarter ended June 30, 2016 the burger chain reported net income of $1.09 billion, or $1.25 per diluted share, compared with $1.2 billion, or $1.26 per diluted share. Wall Street had estimated earnings per share at more than $1.30.
Meanwhile, sales at existing stores in the United States advanced 1.8 percent, widely missing Wall Street estimates by almost half. The chain attributed the result to “continued contributions” from its all-day breakfast platform and McPick 2 value menu despite headwinds from softening industry growth in the quarter.
“McDonald’s US begins the second half of the year focused on adding more breakfast sandwich favorites — Biscuits, McMuffins and McGriddles — to the All Day Breakfast menu this fall,” the company said in an earnings release. “This platform extension will be complemented by initiatives around core menu enhancements and restaurant operations designed to deliver an outstanding customer experience.”
Revenue for the quarter retreated 4 percent to $6.3 billion compared with $6.5 billion in the year-ago period.
International comparable sales for the period grew 2.6 percent led by the United Kingdom, Canada, Australia and “slightly positive results” from Germany. Meanwhile, global comparable sales were up by 3.1 percent reflecting positive comparable sales in all segments, McDonald’s said.
Earlier this month, McDonald’s announced second-quarter charges of $235 million, or 20 cents per share related to refranchising costs — McDonald’s plans to refranchise 4,000 restaurants by the end of 2018 — and the relocation of the burger chain’s headquarters to downtown Chicago.
CEO Steve Easterbrook remained positive the company’s turnaround remains on track.
“I am confident in our system’s ability to stay the course and execute our turnaround plan to achieve our goals,” he said in a statement. “We are on the right path to changing the way customers think about McDonald’s by getting closer to the communities we serve and harnessing one of our system’s key competitive strengths — the entrepreneurial spirit of our dedicated franchisees — as we lay the foundation for future growth.”