MCD reported August global same-store sales growth of +1.9% versus +3.7% in 2012. However, the two-year trend ticked up 245 bps sequentially.
The U.S. and Europe regions showed same-store sales growth of +0.2% and +3.3%, respectively. The U.S. missed consensus expectations by 60 bps, while Europe beat by 340 bps. The two-year trends accelerated sequentially to +1.6% in the U.S. and +3.2% in Europe. The APMEA region reported same-store sales growth of -0.5% versus +5.7% a year ago, beating consensus expectations by 40 bps. The two-year trend accelerated sequentially to +2.6%.
Overall, August sales were slightly better than we had expected—but not enough to change our fundamental view. Although Global sales were better than estimates, U.S. sales disappointed and remain a point of concern for us. MCD continues to refer to the U.S. environment as “persistently challenging,” which, interestingly enough mirrors the chatter we have been hearing from a majority of the larger casual dining companies more so than that of other QSRs.
Despite a flurry of recent initiatives regarding new items and menu changes propelling the stock higher, we remain comfortable with our thesis. In fact, we’ve had a rather bearish take on this news, as we believe these initiatives could add to the operational complexities of McDonald’s stores. Please see our recent note “MCD: A Pending Mighty Disaster” for more thoughts on this topic.
We continue to believe there is a disconnect between investors’ expectations and the company’s fundamentals. MCD will present tomorrow morning at the Goldman Sachs Global Retailing Conference. We’ll post on anything incremental following the presentation.