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McDonald's May sales weak; economy weighs

Tags: McDonald's

McDonald's Corp. reported a lower-than-expected rise in same-store sales in all of its key regions in May and warned austerity measures in Europe and global economic volatility were taking a toll on results, pushing its shares lower on Friday.

Foreign currency rates are also expected to trim earnings this quarter, the world's biggest hamburger chain said.

McDonald's, which has been doing better than most of its peers, said sales at restaurants open at least 13 months grew 3.3 percent globally. Analysts polled by Thomson Reuters expected a rise of 4.6 percent, while analysts polled by Consensus Metrix expected a 5.2-percent gain.

McDonald's said ongoing global economic volatility, austerity measures in Europe, and higher administrative costs were hurting results in the current second quarter.

McDonald's May sales came in below Wall Street's forecasts in each of its major markets, even unexpectedly falling in the Asia Pacific, Middle East and Africa region, while business in Japan and China were weak.

Same-restaurant sales in Europe, McDonald's biggest market, rose 2.9 percent, below expectations of about 4.7 percent. McDonald's said Britain, Russia and France had led the increase, offsetting more tepid business in Germany.

U.S. same-restaurant sales rose 4.4 percent last month, also below Wall Street projections, though McDonald's said its breakfast offerings and new McCafe beverages were popular.

In the Asia Pacific, Middle East and Africa, same-restaurant sales fell 1.7 percent, while analysts were expecting a jump of at least 3.2 percent. The restaurant faulted a drop in sales in Japan and to some degree in China as well.

The restaurant chain said unfavorable foreign currency exchange rates would lower second-quarter profits between 7 cents and 9 cents per share.

Analysts, on average, expect McDonald's to earn $1.41 US per share this quarter, according to Thomson Reuters I/B/E/S. CTV Two CTV News CTV News Channel BNN - Business News Network CP24