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Tue 25th Jul 2017 - Results: Krispy Kreme UK, McDonald’s, Domino’s US
Krispy Kreme UK reports turnover and Ebitda boost: Krispy Kreme UK has reported sales in the UK rose to £66,689,000 in the 11 months to 1 January 2017, up 8% on 12 months ago. As of 1 January 2017, the company operated 80 retail locations across the UK (2016: 61). Krispy Kreme UK stated: “The company also continues to develop its off-premises business with new and long-standing partners. The directors are pleased with the trading performance of the company and the further improvement in gross profit margin to 58.7% (2016: 58.5%). Adjusted Ebitda was £14,620,000 (21.9% of sales) compared with £13,688,000 (22.2% of sales) in the previous year.” Pre-tax profit was £10,292,000, compared with £11,759,000 the year before. Professional fees related to the sale of the company and an aborted IPO were £342,000. A total of £280,000 was received during the period in relation to the surrender of a lease. In October, Krispy Kreme UK abandoned its planned £200m London flotation in favour of a sale to its US parent. Private equity group Alcuin Capital, which controlled the UK arm of Krispy Kreme, was preparing to join a wave of UK autumn floats in a deal being handled by Investec. However, the London listing was ditched after a takeover offer from the American parent in a deal that brought the British operation back in-house. Krispy Kreme was launched in the late 1930s in Winston-Salem in North Carolina when Vernon Rudolph bought a secret yeast-raised doughnut recipe from a New Orleans chef and began selling to local stores. Alcuin originally took a majority stake in Krispy Kreme in 2011 in a £25m transaction. Management and Indigo Capital also held minority stakes.

McDonald’s reports global like-for-likes up 6.6% in second quarter, ‘continued momentum’ in the UK: McDonald’s has reported global like-for-like sales up 6.6% in its second quarter ended 30 June 2017. “We’re building a better McDonald’s and more customers are noticing,” said McDonald’s president and chief executive Steve Easterbrook. “Our relentless commitment to running great restaurants and keeping the customer at the centre of everything we do is generating broad-based strength and momentum across our entire business. For the quarter, we delivered our strongest global comparable sales and guest-count results in more than five years. We’re now introducing our Velocity Growth Plan accelerators in more restaurants around the world, bringing meaningful benefits to more customers through digital, delivery and our Experience of the Future.” Second quarter consolidated revenues decreased 3% (2% in constant currencies) due to the impact of the company’s strategic refranchising initiative. System-wide sales increased 8% in constant currencies due to strong comparable sales performance and restaurant expansion. Consolidated operating income increased 24% (26% in constant currencies), which included a benefit from the prior year’s strategic charges of about $230m. The company returned $1.8bn to shareholders through share repurchases and dividends. The company stated: “In the US, second quarter comparable sales increased 3.9%, reflecting the national cold beverage value promotion and the launch of the Signature Crafted premium sandwich platform. The US continues to build momentum as it executes strategies to enhance convenience, strengthen value and innovate around the menu to bring more customers to McDonald’s more often. Operating income for the quarter increased 5%, reflecting higher sales-driven franchised margin dollars, G&A savings, and higher gains on sales of restaurants. Comparable sales for the International Lead segment increased 6.3% for the quarter, led by continued momentum in the UK, strong performance in Canada and Germany, and positive results across all other markets. The segment’s operating income increased 8% (13% in constant currencies), fuelled primarily by sales-driven improvements in franchised margin dollars. In the High Growth segment, second quarter comparable sales increased 7%, led by strong performance in China and positive results across the entire segment. The segment’s operating income rose 28% (28% in constant currencies), with about half of the increase resulting from lower depreciation expense due to the accounting treatment related to the pending sale of the China and Hong Kong businesses. In the Foundational Markets & Corporate segment, second quarter comparable sales rose 13% and operating income increased significantly, led by a very strong performance in Japan as well as strong results across the segment’s other geographic regions. The segment also benefited from comparison with the prior year’s strategic charges.” Easterbrook added: “While we’re encouraged by our results from the first half of 2017, we’re not complacent. We’re acting like a leadership brand, taking on new challenges and opportunities and moving with a greater sense of purpose and urgency. We’re building on our momentum, leveraging our size and scale and executing with greater precision against our priorities to retain, regain and convert customers by giving them even more reasons to visit and enjoy McDonald’s. I’m confident we’re on the right path to continue positively impacting sales, guest traffic and customer satisfaction as we work to bring the biggest benefit to the most people in the shortest possible time.” Sales were down 3% to $6.265bn in the quarter reflecting the switch to more franchised sites but operating income rose 24% to $1.857bn.

Domino’s US reports 9.5% like-for-like sales growth: Domino’s Pizza US has reported like-for-like sales grew 9.5% in its second quarter, which represents the 25th consecutive quarter of positive sales momentum in the company’s domestic business. International same-store sales grew 2.6% during the quarter, marking the 94th consecutive quarter of positive international like-for-like growth. The company had global net store growth of 217 stores in the quarter, comprising 39 net new domestic stores and 178 net new stores internationally. The company has added 1,281 net new stores over the trailing four quarters. Diluted earnings per share was $1.32 for the second quarter, which was up 34.7% over the company’s diluted earnings per share in the same quarter a year ago. This increase was the result of solid operational results as well as a lower effective tax rate. “It was another outstanding quarter for our domestic business as brand momentum, strong execution and emphasis on getting better each day continued to drive what we do,” said J Patrick Doyle, Domino’s president and chief executive. “While international same-store sales growth was slightly under our expectations, we remain very confident in our continued ability to generate best-in-class growth and are encouraged by the strong store growth we are seeing from our international franchisees. As a work-in-progress brand, we will always remain focused on areas we can improve – but I am extremely pleased our steady strategy, solid fundamentals and strong alignment with franchisees and operators had us well positioned to sustain success and win.”

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