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McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
McDonald's Earnings Preview: 5 Questions
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McDonald's Earnings Preview: 5 Questions

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A preview of McDonald's 2nd Quarter 2014 earnings: five big-picture questions.

A preview of McDonald's 2nd Quarter 2014 earnings: five big-picture questions.

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  • 1. Bacon Clubhouse Burger Image: McDonald’s McDonald’s Earnings Preview: 5 Questions
  • 2. McDonald’s reports 2nd Quarter 2014 earnings on July 22: • In Q1 2014, McDonald’s revenue rose only 1% versus the prior-year quarter. Operating income declined 1%. • Investors will avidly watch for improvement in revenue and earnings trends. They’ll also seek clarity on several fronts, including the following 5 questions…
  • 3. What’s the status of “The Test?” • McDonald’s is testing a mobile ordering app in Columbus, Georgia. • Customers will be able to save favorite orders on their smartphones. • Is the app ready for nationwide rollout? How will this affect revenue? Image: iTunes App Store.
  • 4. Have we got a problem with millennials? • A Consumer Reports study out this month pegged MCD dead last out of 21 burger restaurants for consumer preference. • Millennials in particular are avoiding McDonald’s. • Coca-Cola predicts that the global youth market will control 70% of the world’s spending power by 2020…
  • 5. Have we got a problem with millennials? Image: McDonald’s Instagram feed home page. • And they formed an entire business strategy around this fact -- a year ago. • Will McDonald’s address the Consumer Reports findings on its conference call? • MCD investors want to know that a detailed plan exists to change millennials’ perceptions about the company.
  • 6. Any progress on McDonald’s 4 problem children? • MCD has four problem countries in 2014, or, as management likes to call them, “priority markets:” the U.S., Germany, Japan & Australia. Geschmacksvolltreffer (Taste Hit)! German McRib image by goodiesfirst under Creative Commons license.
  • 7. Any progress on McDonald’s 4 problem children? • Germany and Japan have been particularly vexing, pulling down otherwise positive results in Europe and Asia in Q1. • In total, the four countries contribute more than 60% to MCD’s total operating income. • In the second half of 2014, as these four markets go, so will go the rest of McDonald’s financial performance.
  • 8. Is the back-to-basics theme gaining market share in 2014? • Management has refocused on its most profitable daypart, breakfast. • It’s also promoting MCD’s core menu in 2014, including stalwarts such as the Big Mac and the company’s signature french fries. The humble, mega-selling french fry. Image: McDonald’s.
  • 9. Is the back-to-basics theme gaining market share in 2014? • The refocus seems sound. • Look for initial indications of this push on the earnings conference call. Coffee drives breakfast traffic. Image: McDonald’s.
  • 10. How is new store development in China proceeding? • China is a bright spot in Asia. • Comparable sales grew 6.6% last quarter. • China McDonald’s locations offer delivery, a service that’s growing by double digits. McDonald’s China delivery bike image by Augapfel under Creative Commons License.
  • 11. How is new store development in China proceeding? • The company plans to open 300 new stores in China this year. How many have been opened in the first half of the year? • Still on target for 300 by year end? World’s smallest McDonald’s, Pudong district, Shanghai, China. Image by David Leo Veksler under Creative Commons License
  • 12. Watch for MCD Earnings on July 22: • The Golden Arches need some burnishing -- it’s high time the company shows strong same-store sales growth. • Information on the 5 questions outlined here will also provide some sense of where McDonald’s is headed in the back half of 2014.
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