{"id":66036,"date":"2018-01-30T17:42:35","date_gmt":"2018-01-30T23:42:35","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=66036"},"modified":"2018-01-30T17:42:35","modified_gmt":"2018-01-30T23:42:35","slug":"mcdonalds-reports-strong-adjusted-earnings","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/mcdonalds-reports-strong-adjusted-earnings\/","title":{"rendered":"McDonald’s reports strong adjusted earnings"},"content":{"rendered":"

By Sarah Foster<\/strong>
\nMedill Reports<\/em><\/p>\n

McDonald\u2019s Corp. supersized its adjusted profits and sales, exceeding expectations, for the fourth quarter ended Dec. 31, as cheap meals and promotional deals successfully lured more customers into stores.<\/p>\n

Adjusted profits for the world\u2019s largest fast-food chain, before a big tax charge, soared 9 percent to $1.89 billion, or $1.71 per diluted share, compared with $1.73 billion, or $1.44 per diluted share, in the year-earlier period. Wall Street analysts predicted that adjusted profits would reach $1.23 billion, or $1.59 per diluted share.<\/p>\n

The company’s adjustment excluded a $1.2 billion tax charge associated with the new U.S. tax code’s treatment of repatriated earnings held abroad. Without the adjustment, fourth-quarter profits for the company reached $698.7 million, or 87 cents per diluted share, compared with $1.19 billion, or $1.44 per share.<\/p>\n

\u201cOur top priority in 2017 was serving more customers more often, and we did,\u201d said CEO Steve Easterbrook during an earnings conference call. \u201cThis was our first full year of positive comparable guest count growth since 2012,” referring to an increase in visits to comparable restaurants, those open at least 13 months.<\/p>\n

<\/p>\n

Total revenue reached $5.34 billion, down 11 percent from $6.03 billion a year earlier, compared with Wall Street expectations of $5.23 billion. The decline was caused by a 27 percent decrease in sales by company-operated restaurants. This drop, in turn, reflects the\u00a0company’s efforts to convert about 4,000 of its company-owned stores to franchises by the end of 2017, according to Kevin Ozan, vice president and chief financial offer. Franchised restaurants report fees to the parent company, which are added to company-owned sales to produce total revenues.<\/p>\n

\u201cWe begin 2018 ready to operate under the streamlined and more heavily-franchised business model,\u201d Ozan said.<\/p>\n

U.S. sales rose 4.5 percent at established locations during the fourth quarter, thanks to the success of the \u201cMcPick 2\u201d meal promotion and the new buttermilk crispy chicken tenders. Sales rose 5.5 percent at established stores worldwide \u2014 a six-year high, according to Easterbrook. Easterbrook said the company will continue to emphasize affordability and convenience in an effort to maintain customers.<\/p>\n

Will Slabaugh, restaurant analyst at Stephens Inc., believes this would be a key driver of traffic growth.<\/p>\n

\u201cWe would cite the $1-$2 beverage promotions, McPick 2, and regionalized value bundling as the main traffic drivers,\u201d Slabaugh wrote in a report to investors.<\/p>\n

Profits for the year ended Dec. 31 rose 11 percent to $5.19 billion, or $6.37 per diluted share, compared with $4.69 billion a year ago. Revenues fell by 7 percent to $22.82 billion compared with $24.62 billion a year ago, due to the company\u2019s efforts to franchise more global stores.<\/p>\n

The company also commented on the outlook for 2018, in which it plans to invest $2.4 billion in its \u201cexperience of the future\u201d platform, where stores are remodeled to possess digital menu boards, self-order kiosks, and a more modernized look, according to the company.<\/p>\n

\u201cWe will continue to provide customers an improved experience and greater choice in how they order, pay and are served their food,\u201d Easterbrook said.<\/p>\n

Results for next year, however, will be more \u201cchoppy,\u201d Ozan said.<\/p>\n

\u201c2018 results will be choppy due to the refranchising efforts of several markets in 2017 and the $100 million of depreciation benefit in China and Hong Kong in 2017 associated with the refranchising of those markets,\u201d Ozan said. \u201cWe expect 2018 results to be even a little more choppy, with U.S. tax reform and a new revenue recognition accounting standard that went into effect Jan. 1.\u201d<\/p>\n

McDonald\u2019s shares dropped $5.29 or 2.79 percent to $172.12.<\/p>\n

Photo at top: Customers shop at a McDonald’s in Illinois Center, downtown Chicago. (Sarah Foster\/MEDILL)<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By Sarah Foster Medill Reports McDonald\u2019s Corp. supersized its adjusted profits and sales, exceeding expectations, for the fourth quarter ended Dec. 31, as cheap meals and promotional deals successfully lured more customers into stores. Adjusted profits for the world\u2019s largest fast-food chain, before a big tax charge, soared 9 percent to $1.89 billion, or $1.71 […]<\/p>\n","protected":false},"author":438,"featured_media":66042,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,3987],"tags":[],"class_list":["post-66036","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-winter-2018"],"yoast_head":"\nMcDonald's reports strong adjusted earnings - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/mcdonalds-reports-strong-adjusted-earnings\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"McDonald's reports strong adjusted earnings - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Sarah Foster Medill Reports McDonald\u2019s Corp. supersized its adjusted profits and sales, exceeding expectations, for the fourth quarter ended Dec. 31, as cheap meals and promotional deals successfully lured more customers into stores. 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