McDonald’s Announces It Will Easily Beat Analysts’ Expectations
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McDonald’s Corp., confident that its fabled fast-food sales machine has been repaired, appears ready to rev it up and accelerate the company’s turnaround.
In announcing that every segment of its global business reported positive same-store sales in the third quarter, and that earnings would handily beat expectations, McDonald’s Chief Executive Charlie Bell said Wednesday, “We are now ready to take our revitalization efforts to the next level.”
That effort is expected to include “transferring successful initiatives across borders and making sure that good ideas move forward quickly,” company spokeswoman Anna Rozenich said when asked about specifics of the next steps in the multiyear strategy McDonald’s calls its “Plan To Win.”
Some of that activity already is going on. For example, when premium salads proved a marketing hit in America, McDonald’s exported similar menu additions to Australia and parts of its European market. Just this week, McDonald’s British restaurants augmented their breakfast menus with new items.
Moreover, having assured itself that such basics as fast, friendly service, accurate orders, and clean restaurants are once again instilled in its help, McDonald’s is hoping to encroach on turf traditionally held by some rivals. In several American markets the hamburger giant is testing deli-style sandwiches.
“McDonald’s competitive position is strengthening,” Mr. Bell said as the Oak Brook, Ill., company said it expects to report third-quarter earnings equal to 61 cents a diluted share – 12 cents above analysts’ forecasts. The figure includes a 7-cent gain from overseas tax benefits.
McDonald’s is expected to report full results for the quarter next Tuesday.
September’s results capped another strong quarter, as measured by same-store sales increases. Shaking off the spate of hurricanes and other inclement weather, comparable sales in America rose 10.6%, the 18th straight month of gains. For the quarter, domestic comparable sales were up 8.5%.
Europe continued to be McDonald’s soft spot, as September comps there slipped 0.6%, finishing the quarter up only 0.3%.
The “realities of high unemployment and stagnant economic growth in several countries – most notably Germany – continue to affect our business” on the continent, the company said in a news release.
Still, Europe’s year-to-date comparable sales were up 2.7%, compared with a 2% decline in the 2003 period.
Japan, Australia, and China posted what the company said were “strong” comparable-sales gains in September, resulting in a 7.3% increase for its Asia/Pacific/Middle East/Africa region. For the quarter that area was up 5.4% in same-store sales.
Cheered by those results and the company’s third-quarter earnings guidance, investors pushed up shares of McDonald’s to $28.86, a gain of $1.31, or 4.8%, at the close of Wednesday’s regular session on the New York Stock Exchange. Volume was more than three times the daily average.