McDonald’s Corporation MCD 0.86% reported another quarter’s lackluster results this morning, as the global fast food leader’s sales numbers continue trending in the wrong direction. Adjusted earnings per share of $1.01 represented a 16.5 percent year-over-year (Y/Y) decline, and revenue for the quarter fell 11 percent from 1Q14.
Stock Reacts
McDonald’s stock, which was one of the worst performers in the Dow Jones 30 last year, is up more than 4.3 percent following its Q1 earnings report.
How could the market be so happy about such bad results?
This reaction is likely less about what happened in Q1 and more about what investors hope will happen in less than two weeks.
Turnaround Story
New McDonald’s CEO Steve Easterbrook was quoted in the company’s earnings report, reassuring investors that a turnaround plan is coming soon.
“McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth. We look forward to sharing the initial details of this plan on May 4, 2015,” he said.
More Than Just Talk
Easterbrook has already shown his ability to take an aggressive approach when it comes to McDonald’s operations. In only a month at the helm, Easterbrook has already made moves to increase worker wages, reduce antibiotic use in chicken, test all-day breakfast sales and add premium chicken sandwiches and sirloin burgers to the McDonald’s menu.
Though Easterbrook’s methods have been controversial so far, aggressiveness may be just what McDonald’s needs to stop the bleeding.
McDonald’s saw negative global sales comps of 2.3 percent globally in Q1 and not a single region saw positive comps. These weak McDonald’s numbers come at a time when rivals Restaurant Brands International Inc QSR 4.78% and Yum! Brands Inc YUM 0.04% are growing their businesses.
It remains to be seen whether McDonald’s turnaround plan will get the company back on track or drive it farther off the rails. For now, hopeful investors have less than two weeks to wait.
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