McDonald’s Celebrates First Sales Increase in Two Years
23 Oct 2015 --- Global fast food giant McDonald’s has reported an increase in sales of 4% for the third quarter 2015, marking a possible turnaround in its fortunes. It is the first sales increase in over two years and is largely attributable to the appointment in March of its new chairman and chief executive Steve Easterbrook, who has spent nearly eight months making changes that engage the consumer.
The Chinese supply scandal of 2014 seems far behind McDonald’s now and has led to a less volatile sales platform. The limited edition Silver burger in China also received much attention globally and led to an increase in sales.
Easterbrook commented: "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. I am encouraged by our operating performance for the quarter, with positive comparable sales across all segments, including the US, 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."
McDonald’s reported a global comparable sales increase of 4.0%, reflecting positive comparable sales in all segments, while consolidated revenues decrease of 5% (increase of 7% in constant currencies). There was a consolidated operating income decrease of 2% (increase of 10% in constant currencies) and diluted earnings per share of $1.40, an increase of 28% (44% in constant currencies), due in part to a benefit from comparison to the prior year's increase in tax reserves related to certain foreign tax matters. In addition, the Company returned $3.1 billion to shareholders through share repurchases and dividends.
In the US, third quarter comparable sales increased 0.9%, the segment's first quarterly comparable sales increase in two years. The introduction of the new Premium Buttermilk Crispy Chicken Deluxe sandwich and breakfast, including a return to the classic recipe ingredients for McDonald's iconic Egg McMuffin, contributed to the segment's performance. US third quarter operating income declined 1% as a result of our incremental investment in wages and benefits for all eligible company-operated restaurant employees, which is designed to improve restaurant performance and enhance the employer brand. Moving forward, rebuilding customer traffic remains a top priority for the segment.
Comparable sales for the International Lead Markets segment increased 4.6% for the third quarter led by strong performance in Australia, the UK and Canada and positive results in Germany. Third quarter operating income decreased 11% (increased 5% in constant currencies). Positive consumer response to multiple menu, service and value initiatives throughout most of the segment contributed to the segment's performance.
In the High Growth Markets segment, third quarter comparable sales increased 8.9%, reflecting very strong comparable sales performance in China and positive performance in most other markets. Operating income increased 39% (68% in constant currencies). Emphasis on value and breakfast during the quarter contributed to China's sales recovery.
Easterbrook concluded, "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. 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."
