McDonald's reports 'negative guest traffic in all major segments'
The company reported earnings per share excluding charges of $1.01, missing expectations for $1.06, as global same-store sales fell 2.3% which the company said reflected "negative guest traffic in all major segments."
In the US, same-store sales fell 2.6%, while same-store sales declined by 0.6% in Europe. Same-store sales were down by 8.3% in its APMEA region in the first quarter.
McDonald's revenue in the first quarter totaled $5.96 billion, slightly better than the $5.95 billion Wall Street was looking for. Compared to the year earlier, revenue was down 11%, reflecting 10% of negative currency impacts.
Following this report, shares of McDonald's were up about 1% in pre-market trade.
On its US operations, the company said operating income declined 11% in Q1, reflecting weak sales results and the impact of restructuring and restaurant closing charges. McDonald's added that it "continued to simplify its menu and focus on local menu initiatives to be more responsive to consumers' preferences."
In Europe, operating income declined by 20%, which the company said reflected "soft consumer sentiment and currency and inflation pressures in Russia, as well as ongoing macro-economic headwinds across much of Europe."
The company's operating income in its APMEA segment (or Asia Pacific Middle East and Africa) declined 80% in the first quarter.
McDonald's latest quarterly report is the first that follows news the company would raise wages for employees at its company-owned restaurants, which, while only covering about 10% of its locations, is news that has not been met kindly by the company's franchisees.
Franchisees said that the McDonald's announcement, "stabbed us in the gut" and was an "embarrassing" marketing stunt.
McDonald's franchisees have also said recently that the company is "doomed," writing in response to a survey from analysts at Janney Capital Markets that "The system is broken ... There is no leadership, no plan, no respect for operators or their investment or bottom line."
In its earnings release, McDonald's CEO Steve Easterbrook said that the company is "developing a turnaround plan to improve our performance and deliver enduring profitable growth. We look forward to sharing the initial details of this plan on May 4, 2015."