McDonald's US sales decline for first time in six quarters despite value push
MCD•McDonald's US comparable sales fell 0.2% in the quarter ended September 30, their first decline in six quarters and worse than analysts' expectations for a 0.1% drop. Adjusted earnings rose to $3.57 per share from $3.22 a year earlier, beating estimates of $3.38.
1. US sales turn lower
McDonald's US comparable sales fell 0.2% in the third quarter, missing expectations for a 0.1% decline and ending five quarters of growth. Restaurant visits dropped 4.6% from a year earlier, and traffic remained below year-ago levels in October despite the return of the Monopoly promotion and Halloween-themed Boo Buckets.
2. Profit beats estimates
Adjusted earnings rose to $3.57 per share from $3.22 a year earlier, topping estimates of $3.38. Shares rose 2.4% in premarket trading as operating costs and expenses declined roughly 4%.
3. Value strategy continues
CEO Chris Kempczinski said the company was "encouraged by improvement as the quarter progressed following our intervention on value." McDonald's has introduced offers including an under-$3 menu and a $4 breakfast meal. Its NEXT turnaround strategy aims to improve restaurant-level efficiency by 250 basis points, generating about $100,000 in additional annual cash flow for the average US restaurant.
