McDonald’s (MCD) posted its second-quarter earnings today. The company posted adjusted EPS of $1.99 on revenues of 5.35 billion, outperforming analysts’ EPS estimate of $1.92 and revenue estimate of $5.32 billion. Also, McDonald’s beat analysts’ same-store sales growth or SSSG estimate of 3.5% with 4.0%. However, the company’s US SSSG fell short of analysts’ expectation of 3.0% at 2.6%, which led to the stock price trading marginally lower in the pre-market hours.
Year-over-year revenue growth
Year-over-year, McDonald’s revenue declined 11.5%. The company’s strategic initiative of refranchising led to McDonald’s operating 2,190 fewer restaurants than it did in the second quarter of 2017, which led to a fall in revenues. However, some of the declines were offset by positive global SSSG of 4.0% and the net addition of 2,585 franchised restaurants.
In the United States, the company’s SSSG stood at 2.6%, driven by an increase in average ticket size due to a favorable product mix and an increase in menu pricing. In the International Lead segment, the company’s same-store sales increased 4.9%, driven by strong performance in the United Kingdom and France. The SSSG for the High Growth segment and Foundational markets was at 2.4% and 6.8%, respectively.
During the quarter, McDonald’s posted EPS of $1.90. However, removing special items, the company’s EPS stood at $1.99, which represents growth of 15.0% from $1.73 in Q2 2017. The EPS growth was driven by growth in the franchise business, a lower effective tax rate, and share repurchases. The company has repurchased 38.7 million shares for $6.19 billion.