McDonald's tumbles on flat same-store sales

By Lisa Baertlein and Brad Dorfman

LOS ANGELES/CHICAGO (Reuters) - McDonald's Corp (MCD.N: Quote, Profile, Research) said on Monday that U.S. same-store sales in December hit the lowest monthly level in nearly five years, sending its stock down as much as 8.8 percent and weighing on the fast-food sector.

The burger chain's U.S. December results spooked investors, who worried that consumers had begun cutting back on spending at inexpensive and traditionally recession-resistant fast-food restaurants.

The world's largest restaurant chain operator, which also said tax benefits and overseas sales boosted its fourth-quarter profit above analysts' estimates, cited softer consumer spending and severe winter weather for flat U.S. December sales at restaurants open at least 13 months.

"Obviously, the Street's not crazy about the flat same-store sales. They're nervous about the U.S. consumer," said Gary Bradshaw, portfolio manager at Hodges Capital Management, which controls about 200,000 McDonald's shares.

Morningstar restaurant analyst John Owens said McDonald's U.S. operation has in the past foreshadowed performance in the rest of the world, but he cautioned that investors should not read too much into a single month and that McDonald's U.S. same-store sales rose 3.3 percent for the quarter.

Chief Executive Jim Skinner said in a conference call that weather hurt U.S. sales by about 2 percentage points in December.

Skinner estimated that U.S. economic conditions could shave 1 to 2 percentage points from domestic same-store sales for as long as weakness persists, and forecast a 1.5 percent rise in January U.S. same-store sales.

"You can blame things on the weather once or twice. They haven't done it much so I'll give them the benefit of the doubt," said Carl Sibilski, hedge fund manager at Oyster Capital Management.