McDonald’s Beats Expectations For Q2

McDonald’s (NYSE:MCD) second quarter earnings results beat Wall Street expectations. For the three months that ended June 30, McDonald’s earned $1.4 billion, or $1.70 per share, up 28 percent from the same quarter of last year. On an adjusted basis, earnings came to $1.73 per share, higher than analysts’ forecast for $1.62.

McDonald’s said total revenue was $6.05 billion, a 3 percent year-over-year decline that was still higher than the $5.99 billion analyst consensus. Sales on a global basis rose 6.6 percent at existing locations, well ahead of the 4 percent forecast. The company said the quarterly results were also helped by savings across all of its business segments.

Wall Street reacted favorably to McDonald’s results. Its shares rose more than 4 percent in trading after the earnings announcement. The stock has climbed more than 25 percent since the beginning of the year.

McDonald’s said customer visits increased at existing domestic locations in the latest quarter, though there were about 100 fewer U.S. locations than a year ago. Customer visits have declined in the U.S. for four straight years at existing locations. The company had 14,079 domestic locations at the end of the quarter. McDonald’s is now on track to shrink its domestic footprint for the third year in a row.

McDonald’s $1 sodas and $2 McCafe drinks are helping get people in the door. Chris Kempczinski, president of McDonald’s USA, said that about 75 percent of the people who come in for the drink deals also end up buying food. The discounted drinks and a new line of pricier burgers helped boost sales in its flagship U.S. market by 3.9 percent at existing locations during the second quarter.

Customer visits were up in the company’s nine biggest markets. Globally, it has more than 37,000 locations. CEO Steve Easterbrook said in a statement, “We’re building a better McDonald’s and more customers are noticing.” The company did not specify how much customer visits contributed to the sales increase.

Easterbrook has been trying to modernize the chain’s image by transforming the menu, rolling out delivery, and promising fresh beef in Quarter Pounders. It has also moved to use cage-free eggs and scrapped ingredients with high fructose corn syrup and artificial preservatives. The company plans to sell a Sriracha Mac dipping sauce in the near future, is testing Loaded Bacon & Cheese fries in parts of four U.S. states, and offering pastries by registers in some locations.

The modernizing efforts also include introducing in-store ordering kiosks and launching a mobile order-and-pay option later this year. Easterbrook said, “I’m confident that we’re on the right path to continue positively impacting sales, guest traffic and customer satisfaction as we work to bring the biggest benefit to the most people in the shortest possible time.”

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