McDonald's Cancels Plans to Sell Stake in Japan After ReboundBy
Japan market is poised to maintain strong moment, chain says
Company said it was studying stake sale of unit last year
McDonald’s Corp. said it’s shelving plans to sell a stake in its Japan unit that’s seen a turnaround since the company announced it was looking for a buyer more than a year ago.
After a review, the world’s largest restaurant chain has “made the decision to not proceed with the transaction at this time,” said Chief Financial Officer Kevin Ozan on an earnings call with analysts Tuesday. The decision to keep McDonald’s Holdings Co. Japan won’t impact long-term financial targets or its intention to reach its goal of having 95 percent of restaurants franchised over the long term, he said.
“We’re confident that we have the right capabilities and customer-focused plans to grow our business in Japan, and we believe the market is poised to maintain its strong momentum,” said Ozan.
When McDonald’s announced it was studying the prospect of a sale in Jan. 2016, the Japan unit had posted quarterly losses since mid-2014 in the wake of a series of food scandals. Since then, the unit has rebounded and forecast in February that net income for 2017 will probably be 8.5 billion yen ($76 million).
In March, the unit reported same-store sales rose almost 17 percent from a year ago, extending its monthly sales growth to 16 consecutive months. It’s lured customers by bringing back popular menu items and maintained momentum in the wake of a worldwide mobile game frenzy sparked by Nintendo Co.’s mobile game, Pokemon Go, in which the restaurant gave away figurines of the game’s cartoon characters.
Japan was the biggest contributor to growth in McDonald’s so-called foundational market segment where it’s focused on increasing franchises, with “double-digit comparable sales on top of double-digit performance in the first quarter of 2016,” according to the company.
McDonald’s was seeking to sell as much as 33 percent of outstanding shares in the Japan unit, the Nikkei newspaper had reported.
Shares of McDonald’s Japan have risen about 12 percent this year, compared to the 0.8 percent gain in the benchmark Topix index.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.