Shares of McDonald’s Corp. jumped 8 percent Thursday after the fast food giant topped profit and revenue expectations in the third quarter and said comparable restaurant sales rose for the first time in two years. And while revenue fell 5.3% to $6.62 billion, that beat analysts’ $6.41 billion average projection.
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Global comparable sales climbed 4 percent in the third quarter ended September 30, led by strong performance in Australia, the United Kingdom and Canada.
McDonald’s saw a 0.9% rise in USA same-store sales in the US.
“Clearly, for a turnaround, you want sustained growth”, McDonald’s CEO Steve Easterbrook said.
Shares shot to record-high levels today after the third quarter figures were released, surging from $102.49 to $110.88 in mere hours. “As we begin fourth quarter, comparable sales are expected to be positive in all segments”. Global sales at established restaurants had been anticipated to go up by 1.9% whilst within the USA, restaurants sales had been estimate lower by 0.2 %, based on a consensus estimate.
The company’s share price in morning trading on October 22 was up almost 7% from the previous close of $102.54.
This latest earnings report offers new CEO Steven Easterbrook tangible evidence that the plan he instituted to transform the burger chain into what he refers to as a progressive, modern burger company has started to take shape.
And the company has pledged to improve food quality.
The company earlier this month launched a limited all-day breakfast menu nationally, a move that McDonald’s brass touted as being on par with the introduction of the drive-thru window.
“We continue to believe all-day breakfast will prove to be a meaningful driver of comp growth in 4Q – with an initial sales lift upwards of four percentage points and a sustained lift of two percentage points”, the note said.
Finally, growth in comparable sales in the USA will appease and engage what is at the moment one of the most important stakeholder groups in the company’s universe – its US franchisees.
Comparing the earnings of the Oak Brook Company last year, they made $1.31 billion, or $1.40 per share this year as against the $1.07 billion, or $1.09 per share made last year. Part of that growth was helped by an emphasis on breakfast as well as softness a year ago caused by a food scandal in China.
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For 2015, the company is also closing underperforming stores in the U.S. That is expected to mark the first contraction by locations in at least 1970, according to an Associated Press review of regulatory filings.
