McDonald's misses by $0.04, misses on rev and comps; sees FY14 comps similar to YTD; sees July comps negative
Reports Q2 (Jun) earnings of $1.40 per share, $0.04 worse than the Capital IQ Consensus Estimate of $1.44; revenues rose 1.4% year/year to $7.18 bln vs the $7.29 bln consensus.
- Global comparable sales were relatively flat vs. estiamtes of +0.9%, reflecting higher average check and negative guest traffic in all major segments.
- In the U.S., second quarter comparable sales decreased 1.5% while operating income rose 1%. Results for the quarter reflected negative comparable guest traffic amid ongoing broad-based challenges. Looking ahead, McDonald's U.S. is intent on strengthening the overall customer experience to effectively position the segment for long-term growth. Key areas of focus include service excellence, enhanced marketing, and value, core menu and breakfast daypart initiatives.
- In Europe, comparable sales declined 1.0% and operating income was flat (decrease of 4% in constant currencies) for the second quarter. The U.K. and France delivered solid comparable sales and operating income results for the quarter. Germany's quarterly performance reflected ongoing weakness. Emphasis on compelling premium menu offers, renewed focus on core menu and value options, and the roll-out of blended ice beverages in several markets supported the quarter's performance.
- APMEA's (Asia/Pacific, Middle East and Africa) second quarter comparable sales increased 1.1%, reflecting strong comparable sales performance in China, as well as positive performance in many other markets. Results were impacted by continued weakness in Japan. APMEA's second quarter operating income declined 2% (increase of 1% in constant currencies). Enhanced value offerings, locally-relevant product promotions, convenience initiatives and new store development were positive contributors to the segment's results.
- "Overall, 2014 is a year of strengthening the foundational elements of our business that are critical to enabling and advancing our longer-term strategies. Heading into 2014, we acknowledged that we did not expect any material changes to the operating environment this year. As such, full year 2014 global comparable sales are expected to be relatively similar to year-to-date June performance, with July global comparable sales expected to be negative (Q3 est: +1.4%).