MCD – Perspective on the executive changes

After the close, MCD announced that Ralph Alvarez has decided to retire as President and COO for health related reasons.  Importantly, Mr. Alvarez was the clear heir apparent to become the next CEO of MCD.  While I can personally sympathize with his orthopedic issues, his sudden resignation and stepping down from the board of directors seems somewhat odd.

To put this resignation in context there are some things to consider:

(1)    On December 8th MCD will report its second straight months of declining same-store sales in the USA.

(2)    I continue to contend that the largest new product in the history of the company (McCafe) is not going well, but it might be too early for someone to take the fall for this.  Think Don Thompson!

(3)    If he was such a great asset to the company why is he leaving the board?

(4)    There is a big void to be filled by his potential replacement!  I’m betting on Denis Hennequin, President of McDonald’s Europe!

(5)    MCD accelerated unit growth in Europe and MCD’s Europe Chief Financial Officer Jerome Tafani  said, "the trend in sales

we have seen up until October is not going to change in the coming months." 

Despite Ralph’s personal headwinds the timing and magnitude of this move does not completely rest comfortable with me. 

We will have our estimates for MCD November sales trends out shortly.