McDonald's profit falls on weak U.S., European sales

Tue Jul 22, 2014 4:50pm EDT

A McDonald's restaurant sign is seen at a McDonald's restaurant in Del Mar, California April 16, 2013.  REUTERS/Mike Blake

A McDonald's restaurant sign is seen at a McDonald's restaurant in Del Mar, California April 16, 2013.

Credit: Reuters/Mike Blake

(Reuters) - Quarterly profit at McDonald's Corp fell more than expected after established restaurants in its struggling U.S. division turned in a third straight quarterly sales decline and results from Europe also logged a surprise drop.

Weakness in the world's biggest hamburger chain's two top markets, coupled with its warning of a global fall in same-restaurant sales for July, also helped send McDonald's shares down 1.1 percent in early trading on Tuesday.

McDonald's gets about 30 percent of its revenue from the United States, where sales at restaurants open at least 13 months fell 1.5 percent in the second quarter. Traffic remained depressed amid tough competition from a range of rivals, which include Wendy's Co, Burger King Worldwide Inc and privately held Chick-fil-A.

Analysts had expected McDonald's U.S. comparable sales to fall just 0.3 percent, according to research firm Consensus Metrix.

McDonald's results stood in sharp contrast to Chipotle Mexican Grill Inc, which on Monday reported a 17.3 percent jump in same-restaurant sales at its predominantly U.S. burrito restaurants.

McDonald's said ongoing weakness in Germany was partly to blame for the 1 percent same-restaurant sales decline in Europe, which just beats out the United States as the fast-food chain's top revenue market. Analysts had expected a gain of 0.7 percent, according to Consensus Metrix.

The Asia-Pacific, Middle East and Africa (APMEA) region rose 1.1 percent. The results got a boost from China, which just recovered from food safety and bird flu scares but now is embroiled in a new controversy over a major supplier's meat handling methods. ID:nL4N0PX0CK]

Still, the region's results were light compared with analysts' call for a rise of 1.5 percent.

Second quarter net income fell almost 1 percent to $1.39 billion, or $1.40 per share, missing analysts' average profit estimate by 4 cents per share, according to Thomson Reuters I/B/E/S.

McDonald's shares were trading at $96.07 at in late morning trading. The stock traded at all-time highs above $100 in May.

(Reporting by Lisa Baertlein in Los Angeles and Shailaja Sharma in Bangalore; Editing by Savio D'Souza, Kirti Pandey and Nick Zieminski)

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Comments (1)
ThomJEFFERSON wrote:
LOL… now where are people going to get a job!
Especially laid off middle level managers…

Jul 22, 2014 10:13am EDT  --  Report as abuse
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