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McDonalds Sales Miss Estimates Despite Popular McBites

McDonalds Sales Miss Estimates Despite Popular McBites
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3/8/2012 10:01 AM ET

Fast food giant McDonald's Corp. (MCD: Quote) announced Wednesday that sales at established stores grew 7.5 percent in February, amid strong U.S. demand for its new Chicken McBites.

However, sales growth fell slightly short of expectations due to slower growth internationally, including Europe, where rough winter weather kept customers off the streets.

McDonald's has recently been focusing on enhancing restaurant experience by providing inviting ambiance by modernizing them to match up with upscale fast food joints such as Chipotle and Panera.

The company's success also lies in its readiness to adapt or adjust menu to fall in line with healthier appetites of customers, while also creating creative and affordable menu options.

"The cornerstone of our ongoing sales momentum is our ability to connect with customers and deliver the menu choices, everyday affordability and convenience they expect from McDonald's," CEO Jim Skinner said in a statement.

The Oak Brook, Illinois-based hamburger chain's February global comparable sales growth of 7.5 percent was on top of a 3.9 percent increase in the same month a year ago. The comparable sales measure excludes the impact of currency translation. However, the growth trailed Street estimates that called for a 7.7 percent growth.

System-wide sales or sales at all restaurants (whether operated by the company or by its franchisees) increased 9.4 percent for its restaurants worldwide or 9.7 percent in constant currencies.

The world's largest restaurant chain said its sales were benefit by three percentage points from an extra day due to leap year.

Geographically, February comparable sales in the US grew 11.1 percent, compared to prior year's 2.7 percent rise. US system-wide sales also increased 11.8 percent for the month.

Sales in the US region were boosted by the demand for the now popular Chicken McBites, and the continued strength of McDonald's popular breakfast choices, as well as classic core favorites such as Filet-O-Fish, and signature beverages.

In Europe, comparable sales grew 4.0 percent, which was smaller compared to 5.1 percent increase last year, due to the severe winter weather in certain markets. The performance in the region was led by the UK, and Russia, despite ongoing economic challenges.

Europe's system-wide sales for the month grew 3.5 percent from last year on a reported basis, and increased 6.7 percent in constant currencies.

Comparable sales in the Asia Pacific region increased 2.4 percent, compared to prior year's growth of 4.0 percent. Results were hurt by Japan and the shift of the Chinese New Year timing.

Looking ahead, the company sees the ongoing economic uncertainty, and austerity measures in Europe as well as commodity and labor cost pressures, particularly in the U.S., to impact first-quarter operating income growth.

In Thursday's regular trading session, MCD is currently trading at $96.85, down $3.33 or 3.33% on a volume of 4.03 million shares. In the past 52-week period, the stock has been trading in a range of $72.89 to $102.22.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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