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Mon 25th Jan 2016 - McDonald’s reports global like-for-likes up 5% in Fourth Quarter
McDonald’s reports global like-for-likes up 5% in Fourth Quarter: McDonald’s has reported global like-for-likes rose 5% in the quarter to 31 December 2015, with the US up 5.7%. The UK produced a “strong quarter” boosting like-for-like sales in the company’s “International Lead” segment by 4.2%. “We took bold, urgent action in 2015 to reset the business and position McDonald’s to deliver sustained profitable growth,” said McDonald’s president and chief executive Steve Easterbrook. “We ended the year with momentum, including positive comparable sales across all segments for both the quarter and the year – a testament to the swift changes we made and the early impact of our turnaround efforts. We enter 2016 committed to managing the business for the long term and aligned as a System around the critical imperative that we must run great restaurants each and every day for our valued customers.” The company returned $2.3 billion to shareholders through share repurchases and dividends in the fourth quarter and $9.4 billion for the full year. This brings the cumulative return to shareholders to $15.8 billion against its targeted return of about $30 billion for the three-year period ending 2016. In the US, fourth quarter comparable sales increased 5.7%, benefiting from the October launch of All Day Breakfast and, to a lesser extent, unseasonably mild weather. Operating income for the quarter rose 30%, driven by positive comparable sales and a gain from the strategic sale of a unique restaurant property. Like-for-like sales for the International Lead segment increased 4.2% for the quarter, led by strong performance in the UK, Canada and Australia. Fourth quarter operating income decreased 5% (increased 8% in constant currencies), benefiting from higher franchised margins. Positive consumer response to multiple menu, service and value initiatives contributed to the segment’s performance, while macro-economic concerns, particularly in France, negatively impacted quarterly sales performance. In the High Growth markets, fourth quarter comparable sales increased 3%, reflecting positive performance in Russia and China. Operating income increased 27% (45% in constant currencies) due, in part, to comparison against the prior year supplier issue in China, along with an increase in the segment’s franchised margins. Fourth quarter comparable sales rose 5.9% in the Foundational markets fueled by broad-based strength in Asia and Europe. Operating income for the quarter was negatively impacted by strategic charges related to the company’s global refranchising efforts and weaker results in Japan. Kevin Ozan, McDonald’s chief financial officer, added: “In November, we announced financial goals in conjunction with our business turnaround plan. We outlined specific targets to return about $30 billion to shareholders through a combination of dividends and share repurchases for the three-year period ending 2016, plans to refranchise about 4,000 restaurants by the end of 2018 and reduce our net annual G&A spending by $500 million, the vast majority of which will be realized by the end of 2017. These targets are designed to enhance long-term shareholder value while supporting the work underway to reignite our business results.” Ozan added: “During 2015, we demonstrated our commitment to enhancing shareholder value by returning $9.4 billion to shareholders, while also making progress on our refranchising and G&A targets. For 2016, we expect our capital expenditures to remain at about $2 billion – split fairly evenly between opening new restaurants and reinvesting in existing restaurants as we pursue targeted opportunities to drive long-term profitable growth.” Easterbrook added: “We are demonstrating that our turnaround plan is key to restarting growth and becoming a modern and progressive burger company. I am inspired by the dedication and collective determination of our US, International Lead, High Growth and Foundational markets to leverage our competitive strengths as they pursue their growth opportunities. As we enter 2016, we expect continued positive top-line momentum across all segments.”

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