Ad-Express and Daily Iowegian, Centerville, IA

Community News Network

July 22, 2013

McDonald's falls as 2nd-quarter profit trails estimates

CHICAGO — McDonald's fell the most in nine months after posting second-quarter profit and revenue that trailed analysts' estimates and saying economic weakness would hurt results for the remainder of the year.

McDonald's slid 2.7 percent to $97.53 at 11:37 a.m. in New York after falling 3.2 percent for the biggest intraday drop since Oct. 19. The Oak Brook, Ill.-based company's shares had gained 14 percent this year through July 19, while the Standard & Poor's 500 Restaurants Index rose 17 percent.

Chief Executive Officer Donald Thompson has been trying to attract consumers with less expensive fare, such as Dollar Menu foods in the U.S. and combo meals in Europe. Sales at global stores open at least 13 months rose 1 percent in the quarter, matching the average estimate of analysts surveyed by Consensus Metrix.

"There are folks for whom it's an economic decision to go to McDonald's, and they're not going," Bryan Elliott, an Atlanta-based analyst at Raymond James Financial Inc., said in an interview. "We need to see a meaningful rise in purchasing power" among McDonald's customers, he said.

July same-store sales are projected to be unchanged from last year, Thompson said Monday in a statement. "Based on recent sales trends, our results for the remainder of the year are expected to remain challenged," he said.

Net income rose 3.7 percent to $1.4 billion, or $1.38 a share, from $1.35 billion, or $1.32, a year earlier, the company said. Foreign currency exchange-rate fluctuations reduced profit by 2 cents a share in the quarter. Analysts estimated $1.40 a share, the average of 27 projections compiled by Bloomberg.

"Several currencies weakened against the U.S. dollar during the quarter," Chief Financial Officer Peter Bensen said during a conference call today. Currency translation will negatively affect 2013 profit by 7 cents to 9 cents a share, he said.

The U.S. Dollar Index, which IntercontinentalExchange Inc. uses to monitor the greenback against the currencies of six U.S. trade partners, gained 3.6 percent this year through July 19.

Revenue rose 2.4 percent to $7.08 billion in the quarter, trailing analysts' average estimate of $7.09 billion.

Same-store sales rose 1 percent in the U.S., lagging behind estimates for a 1.5 percent gain, according to Consensus Metrix, a researcher owned by Wayne, N.J.-based Kaul Advisory Group.

McDonald's has faced a U.S. consumer environment where unemployment has been stuck above 7.5 percent for 54 straight months. Competitors also are introducing new items - Burger King Worldwide has smoothies and soft-serve ice cream, while Yum Brands' Taco Bell is testing a $1 menu.

During the past month, McDonald's has increased advertising for its value items to drive more customers into restaurants, Peter Saleh, a New York-based analyst at Telsey Advisory Group, said Monday in an interview. The consumer environment is volatile in the U.S., he said.

"There's no good footing," Saleh said.

Comparable-store sales declined 0.1 percent in Europe and 0.3 percent in the company's Asia Pacific, the Middle East and Africa region, during the quarter. Analysts estimated drops of 0.1 percent and 0.2 percent, respectively. Same-store sales are an indicator of a company's growth because they include only older restaurants.

In Europe, McDonald's is facing a cash-strapped consumer. The Big Mac seller this year has been promoting less expensive items, such as combo meals and 1 euro burgers, in Germany and France, the company's two biggest European markets. The fast- food chain gets about one-third of its revenue from countries in its Europe segment.

McDonald's has about 34,500 stores globally, of which 19 percent are owned by the company.

 

1
Text Only
Community News Network
  • Affirmative action ruling challenges colleges seeking diversity

    The U.S. Supreme Court's support of Michigan's ban on race-based affirmative action in university admissions may spur colleges to find new ways to achieve diversity without using racial preferences.

    April 23, 2014

  • A 'wearable robot' helps her walk again

    Science is about facts, numbers, laws and formulas. To be really good at it, you need to spend a lot of time in school. But science is also about something more: dreaming big and helping people.

    April 23, 2014

  • Cuba is running out of condoms

    The newest item on Cuba's list of dwindling commodities is condoms, which are now reportedly in short supply. In response, the Cuban government has approved the sale of expired condoms.

    April 23, 2014

  • The waffle taco's biggest enemy isn't McDonald's. It's consumer habits.

    Gesturing to Taco Bell, Thompson said McDonald's had "not seen an impact relative to the most recent competitor that entered the [breakfast] space," and that new competition would only make McDonald's pursue breakfast more aggressively.

    April 23, 2014

  • Screen Shot 2014-04-22 at 4.42.47 PM.png VIDEO: Leopard attacks crowd in India

    A leopard caused panic in the city of Chandrapur when it sprung from the roof of a house and charged at rescue workers.

    April 22, 2014 1 Photo

  • The top 12 government programs ever

    Which federal programs and policies succeed in being cost-effective and targeting those who need them most? These two tests are obvious: After all, why would we spend taxpayers' money on a program that isn't worth what it costs or helps those who do not need help?

    April 22, 2014

  • In cuffs... 'Warlock' in West Virginia accused of sexual assault

    Police in West Virginia say a man claiming to be a “warlock” used promises of magical spells to lure children into committing sexual acts with him.

    April 22, 2014 1 Photo

  • Cats outsmart the researchers

    I knew a lot had been written about dogs, and I assumed there must be at least a handful of studies on cats. But after weeks of scouring the scientific world for someone - anyone - who studied how cats think, all I was left with was this statement, laughed over the phone to me by one of the world's top animal cognition experts, a Hungarian scientist named Ádám Miklósi.

    April 22, 2014

  • McCain 1 House Republicans are more active on Twitter than Democrats

    Your representative in the House is almost certainly on Twitter. Your senator definitely is. But how are they using the social network? Are Democrats more active than Republicans, or vice versa? Who has the most followers on the Hill?

    April 22, 2014 1 Photo

  • Do your genes make you procrastinate?

    Procrastinators, in my experience, like nothing better than explaining away their procrastination: General busyness, fear of failure, and simple laziness are just a handful of the excuses and theories often tossed around. Now researchers from the University of Colorado Boulder have added another option to the list: genetics.

    April 21, 2014

  • Do White Castle prices tell us anything about the minimum wage?

    The paper looked at how many delicious steamed sliders the minimum wage has been able to purchase over time. The point is that as it notes, in 1981, the $3.35 minimum could buy a whole dozen. Today, at $7.25, it could purchase just 10.

    April 21, 2014

  • VIDEO: Moose charges snowmobile, flees after warning shot

    While snowmobiling in New England, Bob and Janis Powell of Maine were charged by a moose and caught the entire attack on camera.

    April 21, 2014

  • Can Hillary Clinton rock the cradle and the world?

    What's most interesting to contemplate is the effect becoming a grandmother will have on Hillary's ambition. It's one of life's unfairnesses that a woman's peak career years often coincide with her peak childbearing years.

    April 21, 2014

  • Smartphone kill switches are coming

    Smartphones need kill switches. It's a relatively easy solution to the pricey (and irritating) problem of smartphone theft. But who would have thought that the big carriers would team up with Apple, Google, Microsoft, Nokia, Samsung and lots of other manufacturers to voluntarily begin adding the technology by July 2015? The cooperative spirit! It makes so much sense!

    April 18, 2014

  • Why do wolves howl?

    Of all the myths that dog the wolf, none is more widely accepted than the idea that wolves howl at the moon. Images of wolves with their heads upturned, singing at the night sky, are as unquestioned as a goldfish's three-second memory or a dog's color-blindness (both also myths).

    April 18, 2014

Obituaries
Featured Ads
Poll

The Iowegian wants readers to think about rental permit fees. The Centerville City Council has conducted two working sessions and a third one is planned in order to get a feel for the public's appetite about raising rental permit fees from charging a landlord $25 every two years to charging a certain amount per rental unit per year. So, the question of the week is, "Are you in favor of Centerville increasing rental permit fees?"

A. I'm in favor.
B. I'm not in favor.
C. I'm not sure.
     View Results
Iowegian on Facebook