McDonald's beats by $0.14, beats on revs (134.23)
- Reports Q1 (Mar) earnings of $1.47 per share, $0.14 better than the Capital IQ Consensus of $1.33; revenues fell 3.9% year/year to $5.68 bln vs the $5.53 bln Capital IQ Consensus.
- Comps +4% vs. estimates near +1.5%, reflecting positive comparable sales in all segments while up against an extra day in 2016 due to leap year
- 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. Operating income for the quarter increased 13%, reflecting savings from the Company's recent G&A and refranchising 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.
- Comparable sales for the International Lead segment increased 2.8% for the quarter, primarily driven by continued momentum in the U.K. and Canada's successful launch of All Day Breakfast. The segment's operating income increased 2% (6% in constant currencies), fueled by sales-driven improvements in franchised margin dollars across most markets.
- In the 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 expense due to the accounting treatment of the pending sale of the China and Hong Kong businesses. Results also benefited from prior year VAT reform in China.
- 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.