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McDonald’s Revenue Declined Across The Board

Adam Jones

Are Investors Lovin' It? McDonald's 4Q14 Earnings (Part 4 of 10)

(Continued from Part 3)

McDonald’s revenue declined

With a disappointing same-store sales performance across important segments, it isn’t surprising to see that McDonald’s reported revenue of $6,572 million. McDonald’s revenue declined 7.3%—compared to revenue of $7,093 million in the same quarter in 2013.

Drilling down into each segment

From top to bottom, the Europe segment’s revenue declined 12% year-over-year, or YoY, to $2,567 million—from $2,921 million in 4Q13. In Europe, the company-owned revenue declined 14% to $1,784 million—from $2,093 million YoY. Europe’s franchise revenue declined by 5% to $783 million—from $827 million over the same period.

Next, the US segment experienced a decline in revenue by 2% YoY—from $2,191 million to $2,145 million in 4Q14. US company-owned restaurants declined 3% YoY—from $1,114 million to $1,079 million in 4Q14.

The APMEA (Asia Pacific, Middle East and Africa) region’s revenue dropped from $1,610 million in 4Q13 to $1,510 million in 4Q14. This was a 6% decline YoY. In the APMEA region, the company-owned revenue declined 6.7% to $1,248 million—from $1,338 million in the same quarter in 2013.

Other Countries & Corporate, or OCC, followed with a 6% decline in revenue—from $396 million to $347 million in 4Q14. Again, company-owned restaurants were hit the most. Company-owned restaurants had a 6.5% decline in revenue. Revenue declined to $184 million—from $197 million in 4Q13.

To avoid company-specific events, you may consider an ETF like the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY includes restaurant stocks like McDonald’s (MCD), Yum! Brands (YUM), Darden Restaurants (DRI), and Chipotle Mexican Grill (CMG).

In the next part of this series, we’ll take a look at McDonald’s bottom line , or net profits. We’ll discuss how the margins were affected during the quarter.

Continue to Part 5

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