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McDonald’s Global 3Q15 Same-Store Sales Growth Impresses

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Same-store sales growth

Globally, McDonald’s (MCD) has been facing a deceleration in its same-store sales growth, which had an impact on its top line as well as its earnings growth. Management introduced a turnaround plan in 2Q15, and its impact is taking shape as we look closer at the 3Q15 results.

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Global same-store sales growth

  • Although it’s too early to say for sure, McDonald’s turnaround plan seems to have worked in 3Q15.
  • The most important metric for McDonald’s investors—same-store sales growth—turned positive for the first time after five quarters.
  • Not only did same-store sales growth turn positive, but it also grew by 4% in 3Q15 compared to -3.3% in 3Q14.
  • Last time McDonald’s hit over 4% same-store sales growth was in 1Q12.

The markets

McDonald’s regrouped its markets under four categories. This will was the first quarter where the company reported under these four segments:

  • US Market – the United States (40% of operating income)
  • International Lead Markets – Canada, France, the United Kingdom, Germany, and Australia (40% of operating income)
  • High-Growth Markets – China, Russia, South Korea, Poland, Italy, Spain, the Netherlands, and Switzerland (10% of operating income)
  • Foundational Markets – the remaining ~100 markets (10% of operating income)

Currently, McDonald’s forms about 0.3% of the First Trust Consumer Discretionary Alpha Fund (FXD).

Unlike Chipotle (CMG) and Shake Shack (SHAK), which operate primarily in the US market, McDonald’s has a heavy exposure to global markets, similar to Yum! Brands (YUM). In the next part of this series, we’ll discuss McDonald’s performance by market.

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