Same-store sales rebounded significantly in August in Europe for McDonald’s Corp., providing most of the Oak Brook, Ill.-based company’s 1.9-percent gain in global same-store sales in August.

For the month, same-store sales rose 3.3 percent in Europe and 0.2 percent in the United States, while the company’s Asia/Pacific, Middle East and Africa, or APMEA, division reported a 0.5-percent decline in same-store sales.

McDonald’s disclosed that a trade day shift in August benefited the brand in separate areas of the world between 0.5 percent and 1.4 percent. Accounting for these trade day shifts and regional nuances resulted in a mixed review for McDonald’s August results, several securities analysts noted.


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For instance, Bryan Elliott of Raymond James & Associates wrote in a research note that McDonald’s global same-store sales benefited 0.8 percent from the trade day shift, resulting in an adjusted 1.1-percent gain in worldwide comparable sales in August. That means August’s adjusted same-store sales were identical to those of July, in which McDonald’s 0.7-percent global gain also included a 0.4-percent negative trading day shift.

In the United States, where same-store sales were slightly better than flat, a trading day benefit added about 0.7 percent of positive sales to McDonald’s results, as did the effects of the Monopoly promotion, which ran through Aug. 12, wrote David Tarantino of Robert W. Baird & Co.

“McDonald’s attributed comps softness to a challenging environment as well as ineffective promotions in the second half of the month, after Monopoly ended,” he wrote. “Management seems optimistic that relative performance can improve in September behind a better lineup of initiatives, including Mighty Wings.”

Another analyst, Lynne Collier of Sterne Agee, agreed in a research note that the rollout of new products such as Mighty Wings will improve sluggish sales over the next several months.

Mighty Wings began rolling out as a limited-time offer through November this week, and McDonald’s is in the process of adding steak as an option on breakfast sandwiches in the United States as well.

Premium products drive sales in Europe

Though Germany once again reported a monthly decline in same-store sales, the other big markets in McDonald’s European division — the United Kingdom, France and Russia — offset that with sales gains of their own, driven mostly by premium products, McDonald’s Corp. said.

A new line of blended beverages strengthened sales in the United Kingdom, McDonald’s said, while premium limited-time offers drove results in Russia, and a successful emphasis on core products lifted sales in France. Securities analysts noted that Europe’s gain included a 0.5-percent beneficial trade day shift.

The analysts also noted that August was the first positive month for same-store sales for France and that an earlier end to the Muslim holiday of Ramadan compared with a year earlier likely boosted performance in Europe and APMEA.

However, APMEA’s big three markets of Japan, China and Australia all reported negative results. Japan, which accounts for about 35 percent APMEA’s operating income, reported a 1.9-percent decrease in same-store sales in August, Elliott of Raymond James wrote.

Elliott also noted that McDonald’s surprisingly good August did not materially change his firm’s outlook for earnings per share in fiscal 2013, as softer-than-expected sales in the United States offset the better-than-expected results in Europe. Those two divisions provide about 80 percent of McDonald’s Corp.’s operating income, he added.

“While August marks the first strong month from Europe in some time, the continued weak demand environment in the U.S. should keep consensus estimates from changing much based on this sales release,” Elliott wrote.

McDonald’s operates or franchises more than 34,500 locations in more than 100 countries, including more than 14,000 restaurants in the United States.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN