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McDonald’s posts positive comparable sales in all segments

U.S. sales boosted by expansion of All Day Breakfast.

McDonald's Corp. recently posted better-than-expected first-quarter results for the period ended March 31, 2017.

First-quarter highlights include a 4% increase in global comparable sales, which the company said reflected positive comparable sales in all segments. Consolidated revenues decreased 4% (3% in constant currencies) due to the impact of re-franchising, while consolidated operating income increased 14% (16% in constant currencies). Diluted earnings per share increased 18% (19% in constant currencies) to $1.47. The company also noted that it returned $1.6 billion to shareholders through share repurchases and dividends, in connection with its target to return $22-24 billion to shareholders for the three-year period ending in 2019.

"Our efforts to build a better McDonald's are yielding meaningful results, with continued positive momentum and a strong start to 2017 that includes positive comparable sales across all segments, higher global guest counts and enhanced profitability," McDonald's president and chief executive officer Steve Easterbrook said. "There's a sense of urgency across the business as we take actions to retain existing customers, regain lapsed customers and convert casual customers to committed customers. We're continuing to build a more personalized and enjoyable visit -- which delights customers with the taste and quality of our food and offers the highest level of convenience -- in order to gain traffic in an increasingly competitive industry and deliver profitable growth for our System and shareholders."

In the U.S., first-quarter comparable sales increased 1.7%, building upon strong prior-year results that benefited from the launch of All Day Breakfast. “The U.S. continues to strengthen its foundation as it executes strategic menu, value and convenience initiatives, with first-quarter performance benefiting from the expansion of All Day Breakfast offerings, along with the Big Mac and beverage value promotions,” McDonald's said.

U.S. operating income for the quarter increased 13%, reflecting savings from the company's recent G&A and re-franchising initiatives, a gain from the strategic sale of a restaurant property and higher franchised margin dollars. “The U.S. continues to focus its efforts on driving guest count growth,” McDonald's added.

Comparable sales for the International Lead segment increased 2.8% for the quarter, primarily driven by continued momentum in the U.K. and the successful launch of All Day Breakfast in Canada. The segment's operating income increased 2% (6% in constant currencies), fueled by sales-driven improvements in franchised margin dollars across most markets.

In McDonald's High Growth segment, first-quarter comparable sales increased 3.8%, led by strong performance in China and positive results across the entire segment. The segment's operating income rose 36% (38% in constant currencies), with about half of the increase resulting from lower depreciation expenses due to the accounting treatment of the pending sale of the China and Hong Kong businesses.

In the Foundational Markets & Corporate segment, first-quarter comparable sales rose 10.7%, and operating income increased significantly, led by very strong performance in Japan as well as strong results across the segment's other geographic regions.

Steve Easterbrook concluded, "Today, we're harnessing the strong execution of our fundamental business drivers, a sharp focus on our customers, the benefits of right-sizing our organization and the contributions of the talented franchisees, suppliers and employees to seize the opportunities before us. We're challenging ourselves to identify and pursue initiatives that can bring the biggest benefit to the most customers in the shortest possible time. I'm confident that we're on the right path and well-positioned to unlock incremental growth and deliver against our Velocity Growth Plan for 2017 and beyond."

TAGS: Business
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