Fast food chain McDonald’s (MCD) reported impressive same-store sales for the third quarter, aided by an uptick in the demand for some of its popular meals, especially in the overseas market. Buoyed further by favorable pricing in the US market, the results crushed analysts’ estimate, triggering a stock rally in the early trading hours Tuesday.
Adjusted earnings, excluding special items, jumped 19% during the quarter, beating estimates. Earnings were positively impacted by favorable pricing. Meanwhile, reported net profit dropped to $1.64 billion or $2.10 per share from $1.88 billion or $2.32 per share last year.
During the September quarter, revenues dropped 7% to $5.37 billion, hurt by the company’s strategic refranchising initiative. Sales at company-operated stores were down 18% compared to last year, while franchised outlets registered a 6% increase. The top-line, however, came in above estimates.
Global comparable sales advanced 4.2%, with all the business segments registering strong growth. Same-store sales increased for the 13th consecutive quarter.
Sales at company-operated stores were down 18%, while franchised outlets registered a 6% increase during the three-month period
The management returned $1.7 billion to shareholders through share repurchases and dividends during the three-month period, besides raising the dividend by 15% to $1.16 per share beginning in the fourth quarter.
“In addition to achieving 13 consecutive quarters of positive global comparable sales, we have made substantial progress modernizing restaurants around the world, enhancing hospitality and elevating the experience for the millions of customers we serve every day,” said CEO Steve Easterbrook.
Over the past few quarters, the Chicago, Illinois-based restaurant operator has been witnessing muted sales performance due to disruptions caused by the ongoing initiative to renovate the restaurants, which includes installation of self-order units.
McDonald’s shares rose about 6% Tuesday following the earnings announcement, after closing the previous session higher. After descending from the record highs seen in the beginning of the year, the stock has bounced back. It gained 6% over the past twelve months.