Like The Herald Business Journal on Facebook!
The Herald of Everett, Washington
Heraldnet.com

The top local business stories in your email

Contact Us:

Josh O'Connor
Publisher
Phone: 425-339-3007
joconnor@heraldnet.com

Jody Knoblich
General Sales Manager
Phone: 425-339-3445
Fax: 425-339-3049
jknoblich@heraldnet.com

Jim Davis
Editor
Phone: 425-339-3097
jdavis@heraldnet.com

Site address:
1800 41st Street, S-300,
Everett, WA 98203

Mailing address:
P.O. Box 930
Everett, WA 98206

HBJ RSS feeds

McDonald's warns of global economy's impact on 2Q

SHARE: facebook Twitter icon Linkedin icon Google+ icon Email icon |  PRINTER-FRIENDLY  |  COMMENTS
Associated Press
Published:
NEW YORK -- McDonald's Corp. says strength in the U.S. and Europe drove up a key revenue figure in May, but warned that economic volatility around the world and rising expenses are pressuring its second-quarter results.
The fast-food chain, based in Oak Brook, Ill., also said that foreign currency translations are now expected to hurt second-quarter earnings by 7 cents to 9 cents per share.
Shares of McDonald's were down $1.15, or 1.3 percent, at $87.23 in midday trading.
For May, the company says global sales at stores open at least 13 months rose 3.3 percent. That is a key metric because it excludes the volatility from newly opened or closed stores.
The figure was dragged down by results in the region encompassing Asia Pacific, the Middle East and Africa, where McDonald's said sales fell 1.7 percent from a year ago.
The negative performance in China was likely the result of new "value dinner" promotions that drove down average checks per visit, R.W. Baird analyst David Tarantino said in a note to investors. He also noted that McDonald's is facing increasing competition in the region, where many other fast-food companies are looking to expand as well.
McDonald's noted that it's working to improve results in the region with locally relevant menu options and "convenience enhancements," such as delivery in some Asian markets.
The drop in the region was offset by a 4.4 percent jump in the U.S., where demand for the new blueberry banana walnut oatmeal and Cherry Berry Chiller boosted sales.
In Europe, the sales figure rose 2.9 percent driven by gains in the United Kingdom, Russia and France, with the company's ongoing restaurant renovations helping improve sales. A mix of premium and value options also helped boost results in the region, the company said.
With more than 33,000 stores in 119 countries, McDonald's is the world's biggest hamburger chain and is often seen as a bellwether for the industry.
Although it has consistently outperformed its rivals, McDonald's is facing the same pressures from the global economy and rising ingredient costs that are squeezing the entire industry.
In a note to investors, Bernstein analyst Sara Senatore said McDonald's faces increasing competition in markets including the U.S., Germany, Japan and China, and that the results in May suggest a slower pace of growth ahead after a long period of exceeding expectations.
For the year-to-date, McDonald's sales at stores open at least 13 months is up 5.6 percent, which includes a 6.8 percent jump in the U.S., a 4.2 percent jump in Europe and 3.1 percent increase in the region encompassing Asia Pacific, Middle East and Africa.

MORE HBJ HEADLINES

CALENDAR

Share your comments: Log in using your HeraldNet account or your Facebook, Twitter or Disqus profile. Comments that violate the rules are subject to removal. Please see our terms of use. Please note that you must verify your email address for your comments to appear.

You are logged in using your HeraldNet ID. Click here to update your profile. | Log out.

Our new comment system is not supported in IE 7. Please upgrade your browser here.

comments powered by Disqus

Market roundup