McDonald's: Current trends will persist in 4Q

The company's shares were slipping in pre-market trading after the fast-food chain posted meager growth rates for the third quarter and indicated that it expects those trends "to persist" in the final quarter of the year.

By TheStreet.com Staff Oct 21, 2013 10:35AM

A customer holds his Big Mac burger at a McDonald's restaurant in London, on February 1, 2010 (© Jason Alden/Bloomberg via Getty Images)The StreetBy Laurie Kulikowski

 

McDonald's (MCD) shares were slipping in pre-market trading after the fast-food chain posted meager growth rates for the third quarter and indicated that it expects those trends "to persist" in the final quarter of the year.

 

The Oak Brook, Ill.-based company reported third-quarter net income of $1.52 billion, or $1.52 a share, a 5 percent year-over-year increase. Revenue rose 2 percent  to $7.32 billion. McDonald's global comparable sales rose 0.9 percent.

 

Analysts, according to Thomson Reuters, expected the fast-food chain to post earnings of $1.51 a share on revenue of $7.34 billion.

 

Shares were falling 1.7 percent to $93.52 in pre-market trading.

 

U.S. comparable sales rose a meager 0.7 percent in the quarter, while operating income rose 5 percent, the company said. U.S sales were propped by McDonald's popular Monopoly promotion.

 

Last month, McDonald's kicked off new "Mighty Wings" menu items, featuring bone-in wings sold in 3, 5 and 10 pieces, with prices starting at $2.99. The promotion will go through the end of November.

 

"Looking ahead, the U.S. is focused on fortifying its value leadership position and leveraging recently introduced chicken, beef and beverage options to enhance sales and profitability," the company said in the release.

 

European comparable sales inched 0.2 percent higher. Operating income for the region rose 11 percent (8 percent in constant currency) reflecting strong performance in the U.K. and Russia and solid results in France, but offset by Germany.

 

Comparable sales in McDonald's Asia/Pacific, Middle East and Africa (APMEA) region declined 1.4 percent for the quarter, with operating income slumping 12 percent (4 percent in constant currency) specifically tied to weakness in China, Japan and Australia. McDonald's partially attributed the lower results to the ongoing challenging environments in those areas.

 

There, McDonald's "remains aligned behind the key priorities of accelerating growth at the breakfast and late-night dayparts, enhancing local relevance and broadening accessibility with branded affordability, expanded conveniences and new restaurant openings."

 

McDonald's expects the "dynamics of the current environment to persist."

 

Fourth-quarter global comparable sales will be roughly the same as recent quarters. Restaurant margin percentages are expected to decline "at a level relatively similar to first quarter results," McDonald's says.

 

October global comparable sales are expected to be relatively flat.

 

"While we are focused on strengthening our near-term performance, the current environment continues to pressure results," said McDonald's President and CEO Don Thompson, in the press release. "Around the world, we remain confident in our ability to drive sustained, long-term profitable growth through our global growth priorities -- optimizing the menu, modernizing the customer experience and broadening accessibility. Moving forward, we are committed to enhancing shareholder value through disciplined investments that support our long-term growth opportunities and further differentiate Brand McDonald's."

 

More from TheStreet.com

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

105
105 rated 1
271
271 rated 2
420
420 rated 3
633
633 rated 4
492
492 rated 5
532
532 rated 6
725
725 rated 7
515
515 rated 8
343
343 rated 9
140
140 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
SWNSOUTHWESTERN ENERGY COMPANY10
TAT&T Inc9
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.