McDonald's Q2 Profit Falls, Misses Market As Comps Down

(RTTNews) - McDonald's Corp. announced Monday weak profit in its second quarter, below market estimates, hit mainly by higher charges and lower Systemwide sales and comparable sales. The fast food major's total revenues were nearly flat, but it grew about 1 percent in constant currencies.

In pre-market activity on the NYSE, McDonald's shares were gaining around 0.6 percent to trade at $253.48.

Chairman and CEO Chris Kempczinski said, "We are confident that Accelerating the Arches is the right playbook for our business and as consumers are more discriminating with their spend, we are focused on the outstanding execution of delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty."

In the second quarter, the company's earnings totaled $2.022 billion, down 12 percent from last year's $2.310 billion. Earnings per share dropped 11 percent to $2.80 from $3.15 a year earlier.

The fast-food chain's latest results were hit by select charges of $0.17 per share, compared to $0.02 per share a year ago.

Adjusted earnings were $2.146 billion or $2.97 per share, compared to prior year's $2.324 billion or $3.17 per share.

Analysts on average had expected the company to earn $2.82 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Consolidated operating income decreased 6 percent from last year to $2.92 billion, including $97 million of pre-tax non-cash impairment charges and $57 million of pre-tax restructuring charges associated with Accelerating the Organization.

On an adjusted basis, consolidated operating income decreased 2 percent, while it was flat in constant currencies.

The foodservice retailer with over 40,000 locations recorded revenue for the quarter of $6.490 billion, down 0.1 percent from $6.498 billion last year.

The Street was looking for revenues of $6.08 billion for the quarter.

Systemwide sales decreased 1 percent on a reported basis, but increased 1 percent in constant currencies.

Total comparable sales in the second quarter fell 1 percent, reflecting negative comparable sales across all segments, compared to a significant growth of 11.7 percent in the prior year.

U.S. comparable sales dropped 0.7 percent, compared to a 10.3 percent growth last year, reflecting negative comparable guest counts, partly offset by average check growth due to strategic menu price increases.

International Operated Markets segment decreased 1.1 percent, while last year's growth was 11.9 percent. The company noted that segment performance was impacted by negative comparable sales across a number of markets, driven by France.

International Developmental Licensed Markets segment's comparable sales fell 1.3 percent, compared to 14 percent increase last year. According to the firm, the continued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in Latin America and Japan.

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