Profit at McDonald’s Corp dips, US sales decline
23 Jul 2014
Quarterly profit at McDonald's Corp was down more than expected after established restaurants in its struggling US division reported a third straight quarterly sales decline and results from Europe logged a surprise drop, Reuters reported.
The company's shares also took a hit from weakness in the company's two top markets, coupled with its warning of a global fall in same-restaurant sales for July.
McDonald's shares were down 1.1 per cent in early trading yesterday.
The US accounts for about 30 per cent of the company's revenue, where sales at restaurants that had been open for at least 13 months retreated 1.5 per cent in the second quarter.
Traffic remained depressed as on tough competition from rivals including Wendy's Co, Burger King Worldwide Inc and privately held Chick-fil-A.
According to research firm Consensus Metrix, analysts had expected McDonald's US comparable sales to fall only 0.3 per cent.
McDonald's results sharply contrasted Chipotle Mexican Grill Inc's results, which on Monday posted a 17.3 per cent jump in same-restaurant sales at its predominantly US burrito restaurants.
According to executives at the company, they were working to improve basics such as operational speed and service, however, they did not expect performance to change significantly in the near term.
According to CEO Don Thompson, the company was moving with a sense of urgency to better performance but acknowledged the concerns expressed by analysts about the pace of change during a conference call.
According to the company, globally, comparable sales had come in relatively flat for the period. However, performance of the division dealing with Asia, the Middle East and Africa had helped offset a fall in Europe. However, McDonald's said for July it expected the figure to be negative.
For the quarter ended 30 June, McDonald's earnings stood at $1.39 billion, or $1.40 per share, which fell short of the $1.43 per share expected by analysts surveyed by Zacks Investment Research.
The company had reported earnings at $1.4 billion, or $1.38 per share, a year ago.
Total revenue was up 1.4 per cent to $7.18 billion falling short of Wall Street forecasts of $7.29 billion.
Shares of Illinois-based McDonald's, were down 2 per cent at $95.19 in pre-market trading.