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McDonald’s same-store sales fall

Company cites “tough comparisons” for first decline in more than a year

McDonald’s Corp.’s same-store sales fell 1.3 percent in the U.S. in the fourth quarter ended Dec. 31, thanks largely to tough comparisons, the company said on Monday.

Same-store sales increased 2.7 percent worldwide, however, while diluted earnings per share increased 10 percent to $1.44 from $1.31 — beating analysts’ expectations for the quarter. McDonald’s stock fell slightly in early trading.

Global same-store sales increased 3.8 percent on the year, the best year for the company since 2011.

“Throughout 2016, we worked diligently to lay the groundwork for our long-term future,” CEO Steve Easterbrook said in a statement. “Our efforts yielded a more streamlined and focused organization that generated solid fourth quarter and full-year results.” 

Net income fell 1 percent to $1.19 billion from $1.21 billion. Revenues fell 5 percent to $6 billion from $6.3 billion. Refranchising, general and administrative cuts and various one-time costs and revenue sources influenced the numbers.

McDonald’s introduction of all-day breakfast in 2015, combined with mild weather, led to 5.7 percent same-store sales growth in the fourth quarter of that year. While the company added items to that menu in 2016, it couldn’t quite match up to that performance.

The company said on Monday that it plans to focus on increasing traffic in 2017. Yet Easterbrook noted that the company faces a similar issue in the first quarter of this year, when year-ago same-store sales increased 5.4 percent thanks to better weather and all-day breakfast as well as the introduction of the McPick value menu. 

Same-store sales increased 2.8 percent in its International Lead segment, including more mature foreign markets. They increased 4.7 percent in the company’s High Growth segment, thanks in part to strong performance in China. Same-store sales increased 11.1 percent in the company’s Foundational markets thanks to strong performance in Japan and certain markets in Latin America. 

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

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