McDonald’s Corporation (NYSE:MCD) today announced results for the second quarter ended June 30, 2015.
Second quarter results included:
- Global comparable sales decrease of 0.7%, reflecting negative guest traffic in all major segments
- Consolidated revenues decrease of 10% (increase of 1% in constant currencies)
- Consolidated operating income decrease of 16% (6% in constant currencies), due in part to approximately $45 million of restructuring charges incurred to optimize the Company’s global operating structure
- Diluted earnings per share of $1.26, a decrease of 10% (1% in constant currencies)
- Returned $2.5 billion to shareholders through share repurchases and dividends, bringing the year-to-date return to shareholders to $3.9 billion in connection with our 3-year target to return $18-20 billion to shareholders by the end of 2016.
“We have made meaningful progress since announcing the initial steps of McDonald’s turnaround plan in early May,” said McDonald’s President and Chief Executive Officer Steve Easterbrook. “To position the business for long-term growth, we’ve undergone significant organizational change and are streamlining our global resources to improve our efficiency and effectiveness. While our second quarter results were disappointing, we are seeing early signs of momentum. Looking ahead to third quarter, we expect positive global comparable sales led by growth in our newly-created International Lead Market segment and China’s continuing recovery from the 2014 APMEA supplier issue. I am confident that we will create the transformation necessary for McDonald’s to become a modern, progressive burger company delivering a contemporary restaurant experience.”
In the U.S., second quarter comparable sales decreased 2.0%, reflecting negative guest traffic as the featured products and promotions did not achieve expected consumer response amid ongoing competitive activity. Operating income for the quarter decreased 6%, reflecting the soft, top-line performance. Going forward, local market tests around all-day breakfast and menu simplification will continue as part of the work underway to enhance the experience for over 25 million U.S. customers who visit McDonald’s each day.
Europe’s second quarter comparable sales increased 1.2% driven by solid performance in the U.K. and Germany, partly offset by negative results in France. Second quarter operating income decreased 20% (2% in constant currencies) reflecting economic challenges in certain key markets and strategic charges associated with the global business turnaround plan.
In APMEA, second quarter comparable sales decreased 4.5%, and operating income declined 26% (16% in constant currencies) primarily due to the impact of prolonged, broad-based consumer perception issues in Japan along with negative performance in China and other Asian markets, partly offset by strong performance in Australia.
Kevin Ozan, McDonald’s Chief Financial Officer, noted, “Our turnaround will be led by operational growth and supported by a comprehensive approach to financial management. The structural changes we are implementing, coupled with our plan to refranchise about 3,500 restaurants by the end of 2018 and achieve approximately $300 million of net annual savings on selling, general and administrative expenses by the end of 2017, are designed to position us for future growth. We continue to evaluate additional ideas to further drive shareholder value through actions that deliver sustainable long-term growth.”
Easterbrook concluded, “We begin third quarter under a new structure supported by market-level focus, stronger accountability and an unwavering emphasis on the basic fundamentals of running great restaurants. We are aligning our initiatives and resources behind longer-term strategic actions with the ability to drive meaningful improvements in our business. We have talented franchisees, suppliers and employees working together to create the change needed to deliver a better experience for our customers.” (Original Source)
Shares of McDonald’s Corporation closed yesterday at $97.58. MCD has a 1-year high of $101.09 and a 1-year low of $87.62. The stock’s 50-day moving average is $96.38 and its 200-day moving average is $95.19.
On the ratings front, McDonald’s Corporation has been the subject of a number of recent research reports. In a report issued on June 22, Citigroup analyst Greg Badishkanian maintained a Hold rating on MCD, with a price target of $99, which represents a slight upside potential from current levels. Separately, on June 18, RBC’s David Palmer reiterated a Buy rating on the stock and has a price target of $110.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Greg Badishkanian and David Palmer have a total average return of 18.9% and 16.2% respectively. Badishkanian has a success rate of 79.2% and is ranked #231 out of 3713 analysts, while Palmer has a success rate of 85.5% and is ranked #133.
Overall, 6 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $101.80 which is 4.3% above where the stock closed yesterday.
McDonald’s Corp franchises and operates McDonald’s restaurants in the food service industry. Its geographic segments include the United States, Europe, and Asia-Pacific, Middle East and Africa.