A plethora of third-quarter earnings are being released this week. As some companies have helped the Dow Jones erase last week’s losses with their Q3 earnings, some big corporations are tumbling in sales.
McDonald’s
The global fast-food juggernaut McDonald’s (NYSE:MCD) reported a net income decline of 30 percent from $1.52 billion to $1.07 billion. McDonald’s blamed the lacklustre results on higher tax rates, operating environments in Europe and a weak performance in the United States, the biggest market for the home of the Big Mac.
Overall revenue was down five percent to $6.9 billion and global sales fell 3.3 percent. It has attempted to remedy the year’s declines by offering more breakfast options, providing healthier alternatives and ramping up customer service throughout peak hours.
“We recognize that we must demonstrate to our customers and the entire McDonald’s System that we understand the problems we face and are taking decisive action to fundamentally change the way we approach our business,” said Don Thompson, McDonald’s President and Chief Executive Officer, in a statement.
During the Tuesday pre-market trading, McDonald’s shares were down two percent to $89.60.
Financial analysts purport that this is just another example of McDonald’s trying to stay relevant among the millennial generation, a demographic that studies have found is seeking out healthier fast-food, like Chipotle and Five Guys.
Coca-Cola
Coca-Cola (NYSE:KO) too released its third-quarter results highlighting that it garnered lower profit and revenue because global soda volumes stayed flat. The company reported earnings of $2.11 billion, down from $2.45 billion from the same time a year ago. Revenues dropped to $11.98 billion.
The popular beverage maker cited foreign currency fluctuations as part of the reason for the weakening sales.
In light of the tame earnings, Coca-Cola has announced a cost-cutting initiative that is meant to diminish costs by $3 billion annually by 2019. Also, Coke plans to refranchise most of its bottling territories in North America by the end of 2017. In recent months, the multi-national corporation has undergone hard-line marketing schemes.
Akin to McDonald’s, Coca-Cola shares dwindled four percent in pre-market trading.
Bottom line: are Coca-Cola and McDonald’s simply victims of a dietary shift in the newer generation as younger people want better and healthier food and beverages? If the trend persists in the next decade then both companies may have to consider a re-branding project.
