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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerMcDonald's Corporation (NYSE: MCD) issued Q3 2006 results this morning (19 October), timed to coincide with market opening. Overall, CEO Jim Skinner had positive news to report, though that may have been because negative consumer news was not included in today's public remarks. McDonald's posted "strong operating results" for Q3. Financial highlights included:
Global sales up almost 6%. This is the highest quarterly increase in two years. This increase marks 41 consecutive months of sales growth at McDonald's.
Both company-owned and franchise locations open at least 13 months showed improved profit margins for the third straight quarter. CEO Skinner mentioned McDonald's company wide customer-centric initiative Plan to Win as one of the reasons for increased profit and operating margins. Plan to Win covers 5 areas targeted for improvement: people, products, place, price, promotion.
Overall revenues increased 10%. While much of the growth has been fueled by increases in both market share and revenues in developing markets, McDonald's continues to show improvements in the North American market. CEO Skinner mentioned changes in McDonald's menu offerings to reflect increasing customer concern with healthier food choices as one of the reasons for McDonald's growth in this tough market. McDonald's European division also generated strong quarterly figures. Sales, number of customer visits and operating margins were all on the upswing.
Operating income increased 12%.
EPS increased to 68 cents, an increase of 17%.
The annual dividend has been raised 50% to $1.00 per share. Overall dividend growth of McDonald's stock is one of the highest in the S&P 500.
In his remarks, CEO Skinner reiterated that Mcdonald's wants to be "an ally of families and is dedicated to the well being of children." As evidence of this priority, McDonald's has increased the nutritional value of Happy Meals to include applesauce and milk in most offerings. Additionally, all McDonald's advertising targeting children now encourages children to be more active, both physically and mentally.
McDonald's divested itself of Chipotle's, a Mexican-themed, casual dining chain. "Such divestiture was the right move for both groups of shareholders," according to CEO Skinner. Chipotle can be more flexible to pursue its own agenda, and McDonald's investors will know that senior management will now concentrate exclusively on the McDonald's brand. CEO Skinner also mentioned McDonald's competitive advantages with its supply chain and logistics operations to serve its 300,000 restaurants in 100+ countries. 70% of these locations are locally owned.
McDonald's is committed to finding "innovative solutions to customer service needs" in the form of more menu offerings as well as more nutritional menu offerings. McDonald's has recently implemented a customer service system to increase the efficiency of McDonald's drive-thru to serve more customers. McDonald's is in the midst of a $10 billion initiative to create shareholder value by paying out dividends as well as the repurchase of shares.
COO Ralph Alvarez spoke at length on various initiatives at McDonald's to create "business momentum" to add both top and bottom line value.
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Reader Comments (Page 1 of 1)
10-23-2006 @ 5:14PM
First Pictures Of McDonalds Transformation said...
After 50 years and billions and billions of customers, the McDonald’s Franchise is getting a serious face-lift. The jump into the technology age will include plasma screen televisions, soft couches, coffee tables, and wireless internet access. ABC news reports that all 13,000 McDonald’s Restaurants in the United States will be getting the “McMakeover” by the end of the year. The company will be replacing the historic red brick roof-tops with more modern and sleek roofs. McDonalds make-over comes as the company is working to turn their traditionally kid oriented restaurant into a place for trendy grownups. The company plans to include new mood lighting, fireplaces, and artwork to their stores as well.
McDonald’s hopes they can attract young professionals like Starbucks has in recent years. The redesign is part of a three year old campaign to trim the old image. Personally, I am put off by the idea of transforming the traditional McDonald’s image. Although many would welcome the change with open arms, I could never imagine myself eating on a plush couch inside a “Micky-Dees.” The transformations are also going to hurt franchises who will have to pay anywhere from $300,000 to millions of dollars per restaurant.
http://www.caffeinemarketing.com/marketing-news/mcdonalds-transforming-all-restaurants/