Q2 2011 Earnings Call
July 22, 2011 10:00 am ET
Donald Thompson - President, Chief Operating Officer and Director
Peter Bensen - Chief Financial Officer and Corporate Executive Vice President
Kathy Martin -
Nicole Regan - Piper Jaffray Companies
Keith Siegner - Crédit Suisse AG
Jeffrey Omohundro - Wells Fargo Securities, LLC
Larry Miller - RBC Capital Markets, LLC
John Glass - Morgan Stanley
Michael Kelter - Goldman Sachs Group Inc.
Matthew DiFrisco - Lazard Capital Markets LLC
Jake Bartlett - Susquehanna Financial Group, LLLP
David Tarantino - Robert W. Baird & Co. Incorporated
Jason West - Deutsche Bank AG
Steve West - Stifel, Nicolaus & Co., Inc.
John Ivankoe - JP Morgan Chase & Co
Sara Senatore - Sanford C. Bernstein & Co., Inc.
Mitchell Speiser - Buckingham Research Group, Inc.
Jeffrey Bernstein - Barclays Capital
Joseph Buckley - BofA Merrill Lynch
Gregory Badishkanian - Citigroup Inc
David Palmer - UBS Investment Bank
Previous Statements by MCD
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Good morning, and thanks for joining us, everyone.
With me on the call today are Chief Operating Officer, Don Thompson; and Chief Financial Officer Pete Bensen. Today's conference call is being webcast live and recorded for replay via phone, webcast and podcast.
Before I turn it over to Don, I want to remind everyone that, as always, the forward-looking statements in our earnings release and the 8-K filing also apply to our comments. Both documents are available at www.investor.mcdonalds.com as our reconciliations of any non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures.
And now, I'd like to turn it over to Don.
Thanks, Kathy, and good morning, everyone. I'm pleased to share our latest business results, which continue to be strong. For the second quarter, global comparable sales were up 5.6%. Operating income increased 11% in constant currencies and EPS reached $1.35, an 11% increase in constant currencies. We also returned $1.4 billion to shareholders through share repurchases and dividends during the quarter. Our momentum continues, with July global comparable sales expected to be about 4% to 5%.
Our performance is broad-based. We continue to grow share in every area of the world despite an informal eating-out market that remains relatively flat overall.
Now I've had an opportunity to spend time in many of our major markets around the world over the past several months, and I'm pleased to say that we're focused on taking our business to the next level. The system is aligned around 3 global growth priorities that support our Plan to Win. And we're confident that our emphasis on optimizing and evolving our menu, modernizing the customer experience and broadening accessibility to our brand will continue to move our business forward.
Now when it comes to optimizing and evolving the menu, we are leveraging our iconic products and billion-dollar brands, we're innovating in key menu categories like beverages and chicken, and we're elevating our food image around the world.
Our second priority, which is modernizing the customer experience, is really all about improving both how our restaurants look and feel and how they operate. We keep looking for ways to create efficiencies and build capacity so that we can accommodate our continued guest count growth.
In addition to reimaging our restaurants, we're leveraging technology to enhance the customer experience to make the jobs of our managers and crew easier. For example, innovations like our new point-of-sale system and self-order kiosks, enable restaurant employees to focus on what matters most, the customer experience, and what we call the moment of truth.
Our third priority, which is broadening accessibility to our brand, is about driving growth through value and convenience. You see, to us, value means a great customer experience delivered at a great price so that our customers get the biggest bang for their buck, their yen, euro or pound. The second component of accessibility, which is convenience, is about daypart expansion and continuing to open new restaurants when and where appropriate.
Ensuring our plan's focus on these 3 global priorities enables our teams to be more effective in terms of integrating and aligning their initiatives under the Plan to Win. This is particularly important as we execute against our biggest opportunities by leveraging one of our core competencies, operations excellence.
Now I'd like to share a few highlights from each of the areas of the world. Let's begin with the U.S., where comparable sales for the quarter increased 4.5% and operating income grew 6%. We continue to take share in the IEO marketplace even as the overall industry traffic has been relatively flat.
These are strong results, especially in today's environment, where unemployment levels are still high and consumer confidence continues to waver. Our performance has been driven by a combination of everyday value, the introduction of compelling new menu items, a sustained focus on core favorites and an ongoing emphasis on improving restaurant operations.
We continue to capture an even greater share of the beverage market with the introduction of Frozen Strawberry Lemonade to our McCafé line up. To keep the news coming, we added another great tasting smoothie flavor, Mango Pineapple, at the end of June.
Total McCafé beverage sales rose 29% over second quarter 2010 on top of the gains realized last year. And we're still featuring dollar soft drinks and sweet tea in a majority of our restaurants.