McDonald's Corp. (MCD: Quote) on Monday reported a 4 percent decline in profit for the second quarter, reflecting the negative impact of a strong dollar and weak results at the company's international operations amid the slowing global economy. Following the announcement of the results, McDonald's shares are down more than 3 percent in pre-market trading.
However, the fast food giant's global comparable sales - a metric used to gauge performance of restaurants open for at least one year - increased 3.7 percent, with positive comparable sales in each geographic segment.
Don Thompson, chief executive officer said, "McDonald's global comparable sales remained solid for the quarter while overall results reflected the slowing global economy, persistent economic headwinds and the investments we've made to enhance restaurant operations and provide customers the everyday value they have come to expect from McDonald's."
The Oak Brook, Illinois-based company has of late been focusing on modernizing its restaurants to create an ambiance akin to upscale fast food joints such as Chipotle and Panera.
Looking ahead, the hamburger chain projects July comparable sales to be positive, but less than the second quarter.
In the U.S., McDonald's comparable sales in the latest quarter rose 3.6 percent. Top-line performance benefited from the popularity of McDonald's classic core favorites and the new additions to the McCafe beverage line-up. U.S. operating income for the quarter rose 2 percent.
Europe comparable sales were up 3.8 percent and Asia/Pacific, Middle East and Africa, or APMEA, region comparable sales were up 0.9 percent.
The increase in Europe comparable sales was led by ongoing strength in the U.K. and Russia, with France and Germany also contributing. However, the segment's operating income declined 3 percent.
APMEA region's operating income growth declined 2 percent, as strong performance in Australia and China was offset by weakness in Japan.
McDonald's net income for the second quarter was $1.35 billion or $1.32 per share, down from $1.41 billion or $1.35 per share in the prior-year quarter. Earnings per share for the latest quarter includes negative currency impact of $0.07 per share.
On average, twenty six analysts polled by Thomson Reuters expected the company to report earnings of $1.38 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue for the quarter edged up to $6.916 billion from $6.905 billion in the same period last year. Analysts had a consensus estimate of $6.94 billion. Excluding the impact of currency translation, revenues for the quarter increased 5 percent.
Sales from company-operated restaurants declined 1 percent from last year to $4.67 billion, while revenues from franchised restaurants rose 2 percent to $2.24 billion.
MCD closed Friday's trading at $91.58. In Monday's pre-market, the stock is down $2.79 or 3.05 percent to $88.79.
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by RTT Staff Writer
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