McDonald's shares hit record high as new CEO's turnaround plan start to work

By Money Times

Oct 27, 2015 09:35 PM EDT

The shares of McDonalds' - the world's biggest restaurant chain - jumped more than 8% to hit $110.88 on Thursday. 

CEO Steve Easterbrook, who took over the helm 8 months ago, stated that the rebound in the quarterly restaurant sales showed that his turnaround plan is starting to take effect.

According to Reuters, McDonald shares jumped to a record high of $110.88 in early trading as a renewed focus on value and service helped business around the world.

Meanwhile, CNBC reported that McDonald's earnings rose to $1.40 per share from $1.09 a year ago from revenue of $6.62 billion when Wall Street expected McDonalds' to only deliver $1.27 in earnings per share on expected $6.41 billion. 

"The progress we have made in a short amount of time gives me confidence we're making the right moves to turn around our business and reposition McDonald's as a modern, progressive burger company", Easterbrook said in a conference call to analysts and investors.

The United States being McDonald's No. 1 market for profit, reported a surprise 0.9 percent increase in sales at restaurants open at least 13 months. 

The increase was attributed by Steve Easterbrook to McDonalds' new Premium Buttermilk Crispy Chicken Deluxe sandwich and to a decision of swapping of butter for margarine on its Egg McMuffins.

In China, McDonalds sales which dived after a food safety scandal in July 2014, went up by a whopping 26.8 percent for the quarter boosted by its focus on value and breakfast, reported Reuters.

In established international markets, sales grew by 4.6% topping the 3.4% growth analysts had expected caused by strong performances in Australia, the United Kingdom and Canada.

CEO Easterbrook has announced plans to speed up service, simplify menus and boost food quality. Reuters stated that in the United States, Easterbrook rolled out the all-day breakfast and switched to using chicken from birds raised without important antibiotics. 

He also raised wages for McDonalds' employees.

Easterbrook said restaurant operators have embraced all-day breakfast, and that an early read suggests it is "an incremental profitable business" wooing new and existing customers.

On the other hand, McDonald's said its decision to raise wages and improve benefits for 90,000 employees in U.S. company-operated restaurants took a bite out of operating income.

The third-quarter net income was up 23 percent to $1.31 billion. Revenue fell 5 percent to $6.62 billion.

McDonald's Chief Financial Officer Kevin Ozan noted that the strong U.S. dollar would bring fourth-quarter earnings per share to 8 to 10 cents.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics