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The golden arches beam brighter after Q2 financials

McDonald's work is starting to pay dividends.

photo istock

July 31, 2017

The "golden arches" are glowing a bit brighter today with the Q2 financial report from the longtime QSR mega-chain, which recorded a 6.6 percent jump in global comparable sales and higher- than-expected earnings per share of $1.70, up 36 percent, according to a company news release. 

This has not come without a huge amount of work in the face of an equally huge equal of naysaying all across the industry, and it was reflected in the tone of CEO Steve Easterbrook's statement on the results. 

"We're building a better McDonald's and more customers are noticing," Easterbrook said in the release. "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."

"Velocity accelerators" sounds a little like the chain is leading toward galactic domination, but Q2 results clearly indicate that McDonald's is making a giant leap right here on planet Earth, including these highlights (reported in constant currency):

• systemwide sales growth of 8 percent;
• consolidated revenue decline of 2 percent, the result of a strategic refranchising plan; 
• consolidated operating income growth of 26 percent; and
• diluted EPS growth of 21 percent.

The chain returned $1.8 billion to shareholders in share repurchases and dividends; operating income also grew 5 percent due to higher sales-driven franchise margins and gains in the sale of restaurants, as well as G&A savings. International lead segment comparable sales jumped 6.3 percent in Q2, with momentum building in the U.K. and especially strong results in Canada and Germany.

China led the high-growth segment with Q2 comparable sales up 7 percent and operating income up 28 percent. The segment for foundational markets and corporate saw 13 percent comparable sales growth with significant operating income growth due to especially good performance in Japan. 

"Today, we're acting like a leadership brand, taking on new challenges and opportunities and moving with a greater sense of purpose and urgency," Easterbrook said in the release.  "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."