McD Q2 Comparable Sales Up; Revenues and Net Income Down

McDonald’s Corporation on July 26 reported that global comparable sales increased 3.1% during the second quarter of 2016, which ended on June 30. Profit amounted to $1.09 billion, or $1.25 a share, compared with $1.2 billion, or $1.26 cents during the same period in 2015.

Revenues, however, slipped 4% to $6.265 billion during the quarter and net income fell 9% to approximately $1.094 billion. Half-year sales of nearly $12.169 billion were up 1%, while net income during the first six months climbed 13% to almost $2.218 billion.

In the United States second quarter comparable sales increased 1.8%, with continued contributions from All Day Breakfast and McPick 2, despite softening industry growth during the quarter. Operating income for the 12-week period rose 10%, reflecting higher sales-driven franchised margins and gains from restaurant refranchising.

McDonald's restaurateurs in the USA are now focusing on adding more breakfast sandwiches – Biscuits, McMuffins and McGriddles – to the All Day Breakfast menu in the autumn. This platform extension will be complemented by initiatives around core menu enhancements and restaurant operations.

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Comparable sales for the company’s “International Lead” segment increased 2.6% for the quarter, led by positive performances in the United Kingdom, Canada and Australia, and slightly positive results in Germany. Operating income for the 12-week period increased 4% (7% in constant currencies), driven by improved margins at franchise units.

In the “High Growth” segment, second quarter comparable sales increased 1.6%, paced by positive comparable sales performances in China and Russia, along with solid results across various other markets. The segment's operating income rose 25% (32% in constant currencies), fueled by improved sales in China.

Second quarter comparable sales rose 7.7% in the “Foundational” markets, reflecting very strong performances in Japan and other countries. For the segment, operating income for the quarter declined due to the impact of strategic charges associated with the company's ongoing refranchising and general and administrative cost initiatives.

Commenting on the results, CEO Steve Easterbrook said: "Enhancing the customer experience, running great restaurants and strengthening our competitive position to become a modern progressive burger company takes discipline and dedication. I am confident in our system's ability to stay the course and execute our turnaround plan to achieve our goals."