Management Shakeup At McDonald's Continues With Exits Of King, Hess
Shares of McDonald's (MCD) slipped in morning trading following reports that the company is set to lose several more executives.
WHAT'S NEW: According to sources, several executives could depart McDonald's this week, The Wall Street Journal reported this weekend. According to the report, the sources said Chief Field Officer Karen King plans to retire at the end of 2016, and customer experience senior vice president Erik Hess is also planning his retirement. King is in charge of overseeing 14,200 McDonald's restaurants in the U.S., the report notes, while Hess focuses on menu and strategy and insights. McDonald's spokeswoman Terry Hickey confirmed the exits to CNBC on Sunday, saying that "While Karen and Erik will be greatly missed, their retirements provide an opportunity to change our organizational structure to further enhance our connectivity with our owner-operators and our customers."
WHAT'S NOTABLE: The departures of King and Hess come on the heels of other departures, including the late September resignation of high-growth markets head David Hoffmann. Amid a transformation by CEO Steve Easterbrook into a "progressive burger company," Chief Administrative Officer Pete Bensen announced his retirement in August, followed by U.S. President Mike Andres, who is stepping down on January 1, 2017. McDonald's also announced in August that president of International Lead Markets Doug Goare would take on the role of Chief Restaurant Officer and that Lucy Brady was named senior vice president of Corporate Strategy and Business Development. Despite a challenging environment in several key markets, CEO Easterbrook said in July that customers "are responding" to the company's transformation, which includes an expansion of the company's all-day breakfast offerings. Though the company reported higher than expected earnings per share for the second quarter, its U.S. same-store sales rose 1.8%, below analysts' expectations. In a move to win back millennials and increase its digital efforts, McDonald's recently hired 200 employees from companies like Amazon (AMZN) and PayPal (PYPL), The Wall Street Journal said last week. Q3
CHARGES: McDonald's said last week that as part of a restructuring effort announced last November, which includes plans to refranchise 4,000 restaurants by the end of 2018, the company will incur about $130M in pretax charges, or about 12c per share, for the quarter ended September 30. Going forward, McDonald's expects to take additional strategic charges in connection with its initiatives.
PRICE ACTION: Shares of McDonald's are down about 0.6% to $113.42 in morning trading. Shares are down about 4% year-to-date.
Disclosure: None.