CORRECTED-UPDATE 3-McDonald's 2nd-quarter profit falls, shares slide
(Corrects bullet to show July forecast below Q2, not June)
* Q2 EPS $1.32 misses Street view by 5 cents
* Sees July same-restaurant sales gain below Q2 levels
* Shares down more than 3 percent
July 23 (Reuters) - McDonald's Corp reported lower-than-expected quarterly profit on Monday, hurt by a slowing global economy and the impact of a stronger dollar, and said sales growth at established restaurants would slow this month.
Shares fell 3 percent to $88.81 after the world's largest fast-food chain operator said higher costs and the drag from the U.S. dollar conspired with softening consumer demand to hurt business.
The McDonald's results came days after Chipotle Mexican Grill Inc surprised investors by saying the sluggish U.S. economy had cooled same-restaurant sales growth, adding to concerns about how much consumers were cutting back on discretionary spending.
"We knew it was going to be a tough quarter going in, and it certainly was," Edward Jones analyst Jack Russo said.
"This year is going to be a challenge for the chain. Europe (its biggest market for sales) has slowed down, and the consumer remains pretty frugal," Russo said.
"What we don't know is were they more aggressive in terms of discounting to get customers," he said.
McDonald's net income fell to $1.35 billion, or $1.32 per share, during the second quarter, from $1.41 billion, or $1.35 per share, a year earlier. The impact of the stronger dollar -- which lessens the value of sales overseas for U.S. companies -- cut 7 cents a share from earnings in the latest quarter, the company said.
Analysts, on average, looked for $1.37 a share, according to Thomson Reuters I/B/E/S.
Sales edged up to $6.92 billion from $6.91 billion a year earlier.
Sales at restaurants open at least 13 months were up 3.7 percent in the quarter, exceeding the 2.9 percent increase expected by analysts polled by Consensus Metrix, but down from a 5.6 percent increase in June.
Comparable sales growth slowed even more in June -- to 4.4 from a 7.7 percent rise a year ago.
"You are starting to see signs that consumers are spending less at restaurants," said Morningstar analyst R.J. Hottovy. "You are also seeing increased competition."
The company said it expects same-restaurant sales to rise in July, but less than they did in the second quarter.
Same-restaurant sales rose 3.6 percent in the United States and 3.8 percent in Europe in the quarter. Analysts expected gains of 3.5 percent in the U.S. and 2.4 percent for Europe.
Comparable sales rose 0.9 percent in the Asia/Pacific, Middle East and Africa region, hurt by weakness in Japan. Analysts expected a 0.8 percent increase in that region. (Additional reporting by Brad Dorfman in Chicago.; editing by Jeffrey Benkoe)
- Radar showed missing plane may have turned back: Malaysia military
- Malaysian jetliner may have turned back before vanishing |
- Malaysian plane presumed crashed; questions over false IDs |
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report
- Malaysian jet's disappearance among rarest of aviation disasters