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    MARKET EDGES

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MCD is scheduled to report August comparable sales tomorrow. 

U.S. (facing a 4.5% comparison from last year)


Good: +3.5% or better would signal that the company is maintaining its 4%-plus 2-year average trend.  If the number comes in at 5% or better, it would point to a sequential acceleration in 2- year trends from July.

Neutral: +2.5% to +3.5% would signal a sequential slowdown in 2-year average trends from July, but would point to trends that are still better than what we saw in June.  July 2-year average trends improved 185 bps on a sequential basis from June.

Bad: < +2.5% would signal a return to the May and June 2-year average trend levels.  Anything below +1% would signal a slowdown even from the already depressed June level.

MCD - AUGUST SALES PREVIEW - MCD US July SSS

 

Europe (facing a difficult 11.6% comparison from last year)


Good: +4.0% or better would signal an acceleration in 2-year average trends.  A number better than 4.4% would represent an 8%-plus 2-year average trend.

Neutral: +2.0% to +4.0% would signal that the company is maintaining its 2-year average trend from July.

Bad: < +2.0% would point to a sequential slowdown in 2-year average trends from July.  Although a 2% number would still represent 6%-plus 2-year trends, investors are accustomed to 5%-plus reported numbers on a 1-year basis so a number below 2% would be alarming.  A result worse than flat YOY performance would signal a return to June levels.

MCD - AUGUST SALES PREVIEW - MCD Europe July SSS

 

APMEA (facing a difficult 10.0% comparison from last year)


Good: +3.0% or better would signal an improvement in 2-year average trends on a sequential basis from July.  Anything better than 4% would represent a return to 7%-plus 2-year average trend levels.

Neutral: +1.0% to +3.0% would signal an acceleration from June and July 2-year average trend levels, which had slowed rather significantly from prior months.

Bad: < +1% - A flat to +1% result would still signal a slight acceleration in 2-year average trends from June and July, but like Europe, I think a number below 1% on a 1-year basis would be alarming to investors that are accustomed to 5%-plus results out of the APMEA segment.  A reported -0.5% to -1% would point to 2-year average trends that are similar to the already slowed trends in June and July.

 MCD - AUGUST SALES PREVIEW - MCD APMEA July SSS