U.S. posts 11.1% comp increase, Europe hurt by austerity measures, weather
McDonald’s February global same-store sales increased 7.5 percent, driven by an 11.1-percent surge in the United States, but challenged by a 4-percent increase in Europe, where severe weather and economic challenges slowed sales trends.
The McDonald’s Corp. results were met with a stock decline of 3.2 percent on Thursday, as many analysts and investors expressed caution on consumer and economic trends from abroad. McDonald’s shares closed at $96.96.
Two securities analysts, Andy Barish of Jefferies & Co. and Sara Senatore of Bernstein Research, noted that a choppy performance in Germany and very weak results in France, stemming from newly enacted austerity measures in that country, led the McDonald’s European division to miss Wall Street same-store sales expectations.
McDonald’s itself noted that an unstable global economy will prove challenging.
“The current operating environment includes persistent economic uncertainty, austerity measures in Europe, and commodity and labor cost pressures, particularly in the U.S.,” McDonald’s Corp. said in a statement. “These challenges are expected to impact the company’s first quarter operating income growth.”
February U.S. same-store sales rose 11.1 percent, including a benefit of slightly more than 3 percent due to a 29th day of the month. The company credited, beverages, the Filet-O-Fish menu item and the McBites limited-time offer with driving results.
McDonald’s USA chief marketing officer Neil Golden told Reuters that changes to McDonald’s value strategy would take place later in March.
The Dollar Menu reportedly will no longer include small French fries and small soft drinks, but will be replaced with cookies and ice cream cones. An “Extra Value Menu” will debut March 26, and package several menu items at their current prices above $1 but in some cases less than $2, such as Snack Wraps and double cheeseburgers, up to a 20-piece order of McNuggets for $4.99.
In the Asia-Pacific, Middle East and Africa, or APMEA, division, February same-store sales rose 2.4 percent, as strong numbers in Australia could not overcome slightly negative same-store sales in Japan and China.
According to a research note from Senatore, Japan posted a 1.2-percent drop in same-store sales.
“McDonald’s has limited pricing power in the country due to deflation pressures and a consumer tendency toward couponing,” she said in a note to investors. Senatore also added that a calendar shift in the Chinese New Year helped same-store sales in China in January, but drove sales slightly negative in February.
Oak Brook, Ill.-based McDonald’s operates or franchises more than 33,000 restaurants in 119 countries.