McDonald's (MCD) Global Comps Fell 0.3% in May

McDonald's (NYSE: MCD) announced that global comparable sales decreased 0.3% in May. (The Street was looking for a drop of 0.9%.) Performance by segment was as follows:

• U.S. down 2.2%
• Europe up 2.3%
• Asia/Pacific, Middle East and Africa (APMEA) down 3.2%

"McDonald's has embarked on a turnaround plan to reignite our business performance," said Steve Easterbrook, President and Chief Executive Officer. "Our talented franchisees, suppliers and employees are placing renewed emphasis on the basics of great-tasting, high-quality food, compelling value and outstanding service. Our goal is to be a modern, progressive burger company that is responsive to consumers' evolving preferences, provides a contemporary experience for our customers and drives long-term value for our system and our shareholders."

U.S. comparable sales decreased 2.2% in May reflecting negative customer traffic and ongoing competitive activity. To address its current challenges, the U.S. is working to enhance the customer experience with exciting limited-time menu and value options while testing opportunities to expand convenience, personalization and daypart availability to modernize the business.

Europe's comparable sales rose 2.3% in May as strong results in the U.K. and slightly positive performance in Germany and France were partly offset by slightly negative results in Russia. Europe's monthly performance was supported by consistent everyday value offers alongside compelling premium platforms reinforced with effective marketing and promotional execution to drive demand.

In APMEA, comparable sales declined 3.2% in May as strong performance in Australia was more than offset by continued challenges in Japan and negative performance in China. Strengthening McDonald's quality and value perceptions remains a top priority for APMEA.

Solid comparable sales in McDonald's Other Countries & Corporate segment, which includes Latin America and Canada, contributed positively to the Company's global comparable sales performance for the month.

Systemwide sales for the month decreased 7.2%, or increased 1.8% in constant currencies.

Definitions

• Comparable sales represent sales at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters. Comparable sales exclude the impact of currency translation. Comparable sales are driven by changes in guest counts and average check, which is affected by changes in pricing and product mix. Typically, pricing has a greater impact on average check than product mix. Management reviews the increase or decrease in comparable sales compared with the same period in the prior year to assess business trends.
• The number of weekdays and weekend days can impact our reported comparable sales. In May 2015, this calendar shift/trading day adjustment consisted of one less Thursday and one more Sunday compared with May 2014. The resulting adjustment varied by area of the world, ranging from approximately -0.4% to 0.9%. In addition, the timing of holidays can impact comparable sales.
• Information in constant currency is calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation and bases incentive compensation plans on these results because they believe this better represents the Company's underlying business trends.
• Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.

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