McDonald’s Corporation (MCD)
Q2 2010 Earnings Call Transcript
July 23, 2010 11:00 am ET
Mary Kay Shaw – VP, IR
Don Thompson – President and COO
Pete Bensen – EVP and CFO
Matt DiFrisco – Oppenheimer
David Tarantino – Robert Baird
Steve West – Stifel Nicolaus
John Glass – Morgan Stanley
Joe Buckley – Bank of America Merrill Lynch
Jeff Bernstein – Barclays
Mitch Speiser – Buckingham Research
John Ivankoe – JPMorgan
Jason West – Deutsche Bank
David Palmer – UBS
Nicole Miller – Piper Jaffray
Larry Miller – RBC
Tom Forte – Telsey Advisory Group
Keith Siegner – Credit Suisse
Sara Senatore – Sanford Bernstein
Howard Penney – Hedgeye Risk Management
Rachael Rothman – Susquehanna
Previous Statements by MCD
» McDonald’s Corporation Q1 2010 Earnings Call Transcript
» McDonald’s Corporation Q4 2009 Earnings Call Transcript
» McDonald’s Corporation Q2 2009 Earnings Call Transcript
Hello and welcome to the McDonald’s July 23, 2010 investor conference call. At the request of McDonald’s Corporation, this conference is being recorded. Following today’s presentation, there will be a question-and-answer session for investors. (Operator instructions).
I’d now like to turn the conference over to Ms. Mary Kay Shaw, Vice President of Investor Relations for McDonald’s Corporation. Ms. Shaw, you may begin.
Mary Kay Shaw
Hello, everyone, and thank you for joining us. With me on the call today are Chief Operating Officer, Don Thompson and Chief Financial Officer, Pete Bensen. Today’s conference call is being webcast live and recorded for replay via phone, webcast and podcast.
Before I turn it over to Don, I want to remind everyone that, as always, the forward-looking statements in our earnings release and 8-K filing also apply to our comments. Both documents are available on www.investor.mcdonalds.com as are reconciliations of any non-GAAP financial measures mentioned on today’s call with their corresponding GAAP measures.
Now, I’ll turn it over to Don.
Thanks, Mary Kay. Good morning, everybody. I’m very pleased to share the latest business results for McDonald’s, which continue to be strong. For the second quarter, global comparable sales were up 4.8%, operating income increased 10%, and EPS reached $1.13, a 15% increase.
Now, these results marked our 29th consecutive quarter of global comparable sales growth, confirming the ongoing strength of McDonald’s Plan to Win and our ability to continue to meet and exceed our customers’ needs.
Our momentum is continuing into July with global comparable sales trending in line with or better than second quarter sales. Our strength is broad-based as each area of the world is contributing to our growth. We’re growing share nearly everywhere in an informal eating-out market that varies from declining to slightly up.
Now as we move through the mid-year point, we remain confident in our strategies and we intend to work even hard to keep delivering for our customers. Since becoming Chief Operating Officer about six months ago, I made it a point to visit all of our major markets around the world, from Europe to Asia to Latin America and right here in the USA.
Across the system, I am so impressed with our people, with their energy, and with their commitment to becoming the favorite place and a way to eat and drink for even more customers.
Together, we are focused on taking our business to that next level and we’re aligned around our top priorities for getting us fair. First, it’s optimizing our menu and continuing the growth of business with the right combination of food and beverage choices.
Next, it’s modernizing the experience and elevating everything from how our restaurants look, feel, and operate to how customers engage with our brand.
Third, broadening our accessibility to drive growth through greater convenience, value, and service initiatives. You know all of these things will be brought to life by well-trained, highly-motivated crew and managers. We’re working to seize the biggest opportunities in all of these areas, executing in the most relevant and meaningful ways.
So let’s begin with the U.S., where comparable sales for the quarter increased 3.7% and operating income grew 7%. These are strong results in today’s environment, where we still see nearly double-digit unemployment and low consumer confidence. I am very pleased with this momentum as we continue to take market share and increase guest counts and owner/operator cash flow.
This is especially meaningful at a time when overall restaurant traffic is still down. We’re connecting with consumers in delivering an experience that they are signing more compelling than ever. The key sales drivers in the U.S. continue to be everyday value, relevant menu choice, and greater convenience.
Now, we’ll continue to see strong results from the Dollar Menu at Breakfast, which was launched in January, is generating both solid growth in sales and guest counts during this all important daypart. This summer, we’ve also brought back our $1 drink offerings on both fountain and tea beverages. This was a highly popular value proposition last year that provided a strong lift in beverage sales and we’re seeing positive results very early on.
On the menu front, we’re achieving success through leveraging our popular core products while also delivering relevant new offerings. The McDonald Shrek Forever After promotion drove strong sales of McNuggets, while the launch of Frappes in May has been a huge hit with consumers, contributing to higher sales across our entire coffee line.
In this month, we rode our Wild Berry and Strawberry Banana real fruit smoothies, which are already exceeding expectations and creating a tremendous buzz in the marketplace. This is a product that our customers truly love.
Now looking ahead, we’ll round up the summer with the introduction of the Angus Snack Wrap, elevating our Snack Wrap line and giving consumers another premium on the go offering.