In this file:
· McDonald’s to Sell Chunk of Japan Business, Speed Closures
(MCD) Q2 Earnings Miss Estimates, Comps Down
· McDonald's to close 200 U.S. restaurants. Here's where some of the closures are expected
· McDonald’s Has a Breakfast Problem
McDonald’s to Sell Chunk of Japan Business, Speed Closures
Burger chain adds to cost-cutting measures to stay flexible
After second-quarter lull, marketing is poised to accelerate
By Edward Ludlow, Bloomberg
July 28, 2020
McDonald’s Corp., like many of the customers it serves, is trimming its spending and saving more cash.
The fast-food company said Tuesday it will divest a significant stake in its Japan business and accelerate U.S. restaurant closures it had already planned for future years. McDonald’s aims to close around 200 U.S. stores this year, about half of them at Walmart Inc. locations.
McDonald’s second-quarter results marked its worst global sales decline since at least 2005, according to data compiled by Bloomberg, hurt in part by inconsistent re-openings in international markets as the pandemic raged on. The slump came even with an increase in deliveries and a high proportion of stores fitted for drive-thru service.
Before the steps announced Tuesday, McDonald’s had already slashed marketing costs and suspended share buybacks. The burger chain also had taken out some insurance against the global pandemic by raising $6.5 billion through the debt markets in the first quarter.
McDonald’s said it will cut its ownership in McDonald’s Holdings Co. Japan to at least 35% from 49%. It said the transaction could take a while because of the low trading volumes of McDonald’s Japan shares.
“This decision provides us with additional financial flexibility to execute our capital allocation strategy, while also demonstrating our commitment to our Japanese business,” Chief Financial Officer Kevin Ozan said on an earnings call.
Marketing spending in the U.S. was slashed 70% in the quarter and the company intends to deploy the resulting “war chest” that it built up as the situation is expected to stabilize in the second half. McDonald’s will also invest an incremental $200 million in marketing across U.S. and international markets in the second half to lure back customers.
McDonald’s shares fell 2.1% to $196.94 at 2:31 p.m. in New York.
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McDonald's (MCD) Q2 Earnings Miss Estimates, Comps Down
Zacks Equity Research
via Yahoo Finance - July 28, 2020
McDonald's Corporation MCD reported mixed second-quarter 2020 results, wherein the bottom line missed the Zacks Consensus Estimate but the top line beat the same. However, both earnings and revenues declined year over year. Results in the quarter were impacted by the coronavirus pandemic. Limited operations and change in consumer behavior also hurt the company’s performance. Following the results, the company’s shares are down 2% in pre-market trading session.
However, robust drive-thru presence and its investments in delivery and digital over the past few years have aided the company during the current scenario. The company witnessed continued improvement in results throughout the second quarter. As of Jun 30, 2020, most of the company’s restaurants are open globally.
The company reported adjusted earnings of 66 cents per share, which missed the consensus of 76 cents. Moreover, the bottom line declined 68% year over year. Meanwhile, foreign currency translation had a negative impact of 1 cent per share on earnings in the quarter under review.
Revenues & Comps Discussion
In the second quarter, revenues of $3,761.5 million beat the Zacks Consensus Estimate of $3,698 million. However, the figure declined 30% year over year. This downtrend can primarily be attributed to the coronavirus pandemic. Moreover, on a constant-currency basis, the top line decreased 29% on a year-over-year basis.
At company-operated restaurants, revenues came in at $1,593.7 million, down 34% year over year. Moreover, the same at franchise-operated restaurants slumped 29% to $2,088 million.
In the quarter global comps declined 23.9%, against a gain of 6.5% in the prior-year quarter. Comps declined for the second straight quarter after reporting positive comps in the trailing 19 quarters. In first-quarter 2020, comps were down 3.4%.
Solid Comps Across Segments ...
McDonald's to close 200 U.S. restaurants. Here's where some of the closures are expected
Kelly Tyko, USA TODAY
Jul 28, 2020
McDonald's is permanently closing 200 of its 14,000 U.S. locations this year with "low-volume restaurants" in Walmart stores making up over half of the closures.
During its quarterly earnings call Tuesday, the fast food giant said the closings were previously planned for future years but are being accelerated. Officials also shared the continued impact the coronavirus pandemic is having on sales globally.
"Within a matter of weeks, the McDonald's system made operational modifications across 30,000 restaurants, while closing and then reopening another 9,000 restaurants," CEO Chris Kempczinski said during Tuesday's earnings call...
McDonald’s Has a Breakfast Problem
Demitrios Kalogeropoulos, The Motley Fool
via Nasdaq - Jul 29, 2020
Investors were bracing for some unusually weak sales and profit numbers from McDonald's (NYSE: MCD) in its second-quarter report (which covers the months of April, May, and June). The period captures some of the most intense impacts to date from the COVID-19 pandemic. The fast-food giant had already revealed sharp revenue declines in April and May across most of its markets, too.
On Tuesday, McDonald's issued its full results that showed a clear trend toward a return to global sales growth through June. However, the chain may be losing ground to some of its peers as consumers increasingly skip their breakfast trips.
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Improving sales trends ...
The breakfast problem ...
Getting back to growth ...
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