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4-Traders Homepage  >  Equities  >  Nyse  >  McDonald's Corporation    MCD

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McDonald's Corporation : McDonald's May Same-Store Sales Growth Slows

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06/08/2012 | 02:35pm CEST

--Global same-store sales rose 3.3% in May, well below analysts' 5.2% projection

--McDonald's blames economic issues for missed expectations

--Shares down 2.8% at $85.95 premarket

McDonald's Corp.'s (MCD) global same-store sales rose a slower-than-expected 3.3% in May as economic woes such as austerity measures in Europe and slowing growth in China pressured the world's largest fast-food chain's results.

Shares were recently trading 2.8% lower at $85.95 in premarket trading as analysts were expecting a 5.2% increase in global sales from restaurants open at least 13 months, according to Consensus Metrix. After ending last year as one of the best performing stocks in the Dow Jones Industrial Average, McDonald's shares are down 12% since the beginning of the year, through Thursday's close.

McDonald's has been able to boost guest traffic and sales faster than most of its competitors with its increasingly diverse menu--ranging from value-price offerings to higher-margin products like blended-ice drinks--and its growing global operations. But the hamburger chain has previously warned the global economic climate remains challenging with varying degrees of consumer confidence, economic pressures and inflationary costs. The headwinds also contributed to the company missing April sales-growth estimates.

"Despite the increasingly challenging global economic environment," Chief Executive Jim Skinner said, "I am confident we will continue to deliver long-term sustainable growth."

Most restaurant chains are seeing their strongest growth in emerging markets like Asia, but for McDonald's, the U.S. has become its biggest growth engine, despite the fact that the restaurant industry is over-saturated and highly competitive.

Same-store sales in the U.S. rose 4.4%, missing the 5.3% growth estimate from Consensus Metrix. The company attributed its growth to the launch of its seasonal Blueberry Banana Nut Oatmeal and continuing demand for its breakfast items. But Burger King and Yum Brands Inc.'s (YUM) Taco Bell are making a comeback in the U.S., potentially posing a threat to McDonald's.

In Europe, same-store sales grew 2.9%, well below the 5.1% analyst estimate, as austerity measures offset the benefits of remodeling restaurants. McDonald's has said that it is seeing weakness in France, Germany and the U.K., as unemployment puts a damper on its sales.

The Asia/Pacific, Middle East and Africa region posted a 1.7% decrease, while analysts projected a 3.2% rise. McDonald's said positive results in Australia were more than offset by negative results in Japan as it is still recovering from last year's tsunami and, to a lesser extent, China, which is seeing its economic growth slow to 8% this year from last year's 9%.

McDonald's reported in April its first-quarter earnings rose 4.8% as sales grew slightly faster than expected, signaling the company's resilience against broader economic woes. But R.W. Baird analyst David Tarantino notes that McDonald's management's cautious tone in April regarding the second quarter, combined with negative currency movements since the start of May, suggest second-quarter earnings could fall below analysts' consensus.

McDonald's said May systemwide sales rose 1.2%, or 5.6% in constant currencies.

Write to Melodie Warner at melodie.warner@dowjones.com

Write to Annie Gasparro at annie.gasparro@dowjones.com

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Financials ($)
Sales 2017 21 796 M
EBIT 2017 8 228 M
Net income 2017 5 008 M
Debt 2017 26 078 M
Yield 2017 2,95%
P/E ratio 2017 20,96
P/E ratio 2018 19,51
EV / Sales 2017 6,06x
EV / Sales 2018 6,90x
Capitalization 105 929 M
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Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 134 $
Spread / Average Target 3,8%
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NameTitle
Stephen J. Easterbrook President, Chief Executive Officer & Director
Enrique Hernandez Non-Executive Chairman
James R. Sappington Executive VP-Operations and Technology Systems
Kevin M. Ozan Chief Financial Officer & Executive Vice President
Andrew J. McKenna Chairman-Emeritus
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1st jan.Capitalization (M$)
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CHIPOTLE MEXICAN GRILL..9.73%11 913
YUM CHINA HOLDINGS INC0.08%10 046
DOMINO'S PIZZA, INC.14.89%8 788
DOMINO'S PIZZA ENTERPR..-12.26%3 862
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