McDonald’s stock is rallying more than 4% Wednesday as the company announced a new turnaround plan to be revealed early next month.
Results, though nothing to brag about, were better than expected. The world’s biggest fast-food company said it had a profit of 84 cents per share. Earnings were $ 1.10 per share, adjusted for non-recurring costs. That beat Wall Street expectations, which were $ 1.05 per share.
Meanwhile,
MCD
revenue for the quarter was $ 5.96 billion — which fell short of Wall Street expectations, at $ 6.02 billion.
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But the big news from the embattled company was the announcement by CEO Steve Easterbrook to reveal a new turnaround plan on May 4.
“As the world’s leading restaurant company, we are evolving to be more responsive to today’s customer,” said Easterbrook, in a statement. “McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth. We look forward to sharing the initial details of this plan.”
For McDonald’s, a turnaround couldn’t come soon enough. For nearly two years, the chain has seen its stock decline even as its same-store sales, particularly in the U.S. market, have been falling. The company has been playing catch-up to much of the fast-food industry, trying to improve the quality of its food and mend its tattered brand image.
For the first quarter, global comparable sales decreased 2.3%, reflecting negative guest traffic in all major segments, the company said. Consolidated operating income decreased 28% (20% in constant currencies) due to weaker operating performance and $ 195 million of strategic charges related to restaurant closings and other management actions.
In the U.S., first quarter comparable sales decreased 2.6% reflecting negative sales and guest traffic as the segment’s product and promotional offers did not overcome the competitive activity. U.S. operating income for the quarter declined 11%, reflecting weak sales results and the impact of restructuring and restaurant closing charges.
Europe’s first quarter comparable sales declined 0.6% as positive performance in the U.K. was more than offset by weak results in France and Russia. First quarter operating income decreased 20% (4% in constant currencies) reflecting soft consumer sentiment and currency and inflation pressures in Russia, as well as ongoing macro-economic headwinds across much of Europe, the company said.
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