Fast food giant McDonald's Corp. (MCD) announced Wednesday that sales at established stores remained flat in July, as sales across regions were poor amid "the challenging environment" despite promotional activity. The result missed analysts' expectations by a wide margin. Following the announcement, the company's shares were down more than 3 percent in pre-market trading.
"We are committed to driving the business over the long-term by executing our proven Plan to Win strategy, despite softer global comparable sales in July. Our leadership team has the experience to effectively manage through the challenging environment and build sales and market share," CEO Jim Skinner said in a statement.
The Oak Brook, Illinois-based hamburger chain's July global comparable sales were flat on top of a 5.1 percent increase in the same month a year ago, and trailed Street estimates that called for a 2.3 percent growth. The comparable sales measure excludes the impact of currency translation.
Comparable sales represent sales at all restaurants, whether operated by the company or by franchisees, in operation at least thirteen months including those temporarily closed.
The world's largest restaurant chain said system-wide sales or sales at all restaurants (whether operated by the company or by its franchisees) decreased 3.2 percent for its restaurants worldwide or grew 2.3 percent in constant currencies.
Geographically, July comparable sales in the US edged down 0.1 percent, compared to prior year's 4.4 percent rise. However, US system-wide sales also increased 0.7 percent for the month.
Sales in the US region were weak as promotional activity did not offset the effects of the sluggish economy. However, the bright spot remained the continued strength of McDonald's popular breakfast choices as well as the McCafe Frappe line-up.
Looking ahead, the company expects to turnaround U.S. sales by "providing a well-balanced combination of value, variety and innovation across the menu."
In Europe, comparable sales edged down 0.6 percent, which was lower compared to a 5.3 percent increase last year. Strong results in the U.K. and Russia were more than offset by weak results in Germany and Southern European markets.
However, Europe's system-wide sales for the month declined 10.3 percent from last year on a reported basis, but increased 2.3 percent in constant currencies.
Comparable sales in Asia/Pacific decreased 1.5 percent, compared to prior year's growth of 4.0 percent. The ongoing weakness in Japan and the shift in timing of Ramadan, was partially offset by positive results in Australia.
"I am confident that McDonald's will continue to succeed as we execute against our three global priorities of optimizing the menu, modernizing the experience and broadening accessibility to our brand," Thompson added.
MCD closed Tuesday's regular trading session at $89.01, down $0.77 on a volume of 4.73 million shares.
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