McDonald's Q4 US same-store sales climb 4.5%
Jan. 30, 2018
by Erica Shaffer
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New tax law weighs on net income for the quarter.
OAK BROOK, Ill. – McDonald’s Corp. reported strong same-store sales at its restaurants during the fourth quarter, but net income was dented by a one-time charge due to the change in federal tax laws.
In the United States, same-store sales advanced 4.5 percent for the quarter ended Dec. 31, 2017, helped by a strong performance of core menu items under the McPick 2 value platform coupled with strong consumer demand for Buttermilk Crispy Tenders and delivery, the company said. Global comparable sales increased 5.5 percent on positive guest counts in all segments.
President and CEO Steve Easterbrook said in a statement that “…2017 was a strong year for McDonald’s as customers responded to the many ways we are making their experience more convenient and enjoyable. We served more customers more often, achieved our best comparable sales performance in six years, gained share in markets around the world and made tremendous progress with growth platforms such as delivery, mobile order and pay and Experience of the Future.”
Net income for the fourth quarter dropped 41 percent to $698.7 million, or $0.87 per diluted share, from $1,193.4 million, or $1.44 per diluted share, due to a charge resulting from the Tax Cuts and Jobs Act of 2017.
Total revenues for the quarter retreated 11 percent to $5,340.2 million from $6,028.9 million.
Comparable sales for the International Lead segment advanced 6 percent for the quarter, led by continued momentum in the United Kingdom and Canada, as well as positive results across all other markets, McDonald’s reported. Operating income in the segment increased 14 percent, (7 percent in constant currencies), driven by improvements in franchised margin dollars.
McDonald’s High Growth segment reported fourth quarter comparable sales increased 4 percent on strong performance in China and positive results across most of the segment. Challenges in South Korea partly offset results, the company said.
Finally, fourth quarter comparable sales in the Foundational Markets segment gained 8 percent with positive sales in all geographic regions.
Looking ahead in 2018, CFO Kevin Ozan said McDonald’s plans to invest about $2.4 billion of capital to accelerate implementation of the company’s Experience of the Future. Much of the investment will be dedicated to existing locations.
“Our development plans also include the opening of about 1,000 new McDonald’s restaurants, 75 percent of which will be funded by our expanded network of developmental licensees and affiliates around the world,” Ozan said. “At the same time, we plan to continue making meaningful investments in technology to modernize the customer experience and redefine convenience. I’m confident that now is the opportune time to strategically invest in our business and our restaurants to drive profitable growth and become an even better McDonald’s.”