* U.S. February same-store sales up 2.8 percent
* Sees currency cutting Q1 EPS by 7-9 cents
* Shares up 1.2 percent
(Adds analyst comments, estimates, byline; updates stock
By Brad Dorfman and Lisa Baertlein
CHICAGO/LOS ANGELES, March 9 McDonald's Corp
(MCD.N) posted a 1.4 percent rise in February sales at
restaurants open at least 13 months, as strength in the United
States helped offset the impact of the stronger dollar.
Shares in the company -- one of the restaurant industry's
top performers -- were up 1.2 percent in morning trade.
The company booked higher sales despite having one fewer
day in February, since 2008 was a Leap Year. The loss of that
one day cut about 4 percentage points from same-store sales,
the company said on Monday.
Still, McDonald's cautioned that at current currency
exchange rates the stronger dollar would cut first-quarter
earnings by 7 to 9 cents a share. Analysts, on average, expect
the company to post a first-quarter profit of 83 cents per
share excluding stock-based compensation, according to Reuters
RBC Capital Markets analyst Larry Miller said same-store
sales were "better than fine," noting that the company repeated
an earlier warning about the impact of the stronger dollar and
said commodity costs could weigh on results.
"You could take that as a cautionary statement on the
quarter," Miller said.
The stronger dollar, which lessens the dollar-value of
sales made overseas, would cut revenue by $600 million in the
quarter at current rates, the company said.
McDonald's said "unprecedented volatility" in foreign
currency exchange rates and commodity costs would continue to
pressure revenue and margins.
Weaker foreign currencies -- including a significant
decline in currencies of Eastern European countries, where
McDonald's mainly operates company-owned restaurants, are
expected to be a drag.
Stifel Nicolaus analyst Steve West, who has a "buy" rating
on McDonald's shares, said changes in February currency
exchange rates caused reported sales to be 7.8 percent lower.
West maintained his 2009 and 2010 outlooks calling for
earnings of $3.85 and $4.22 per share, respectively. He expects
foreign exchange to weigh on results throughout this year, with
some offset from a lower expected tax rate.
Still, McDonald's and some other fast-food restaurants have
benefited as a global economic downturn has sent customers to
lower-priced fare, including the company's Dollar Menu items.
"Consumers all over the world, especially in Europe and the
United States, are looking for value and they are trading
down," Edward Jones analyst Jack Russo said. He added that
McDonald's sales for the month appeared to slightly beat
consensus expectations after factoring out the calendar shift.
February same-store sales rose 2.8 percent in the U.S., due
to strong sales of chicken products and the Quarter Pounder
hamburger, McDonald's said.
Same-store sales fell 0.2 percent in Europe, while
same-store sales in the company's Asia/Pacific, Middle East and
Africa segment rose 0.7 percent.
All three regions were hurt to varying degrees by the
decline in the number of days in the month.
Shares in McDonald's were up 60 cents to $52.72 in morning
trade on the New York Stock Exchange.
Shares in Taco Bell, KFC and Pizza Hut parent Yum Brands
Inc (YUM.N) and Wendy's/Arby's Group Inc WEN.N were down 1.7
percent and 3.4 percent respectively, while Burger King
Holdings Inc BKC.N shares were up 1.7 percent.
(Reporting by Brad Dorfman and Lisa Baertlein; Editing by
Gerald E. McCormick and Derek Caney)