McDonald's 2Q Profit Rises 12% On Continued Sales Gains

Date : 07/23/2010 @ 9:13AM
Source : Dow Jones News
Stock : Burger King Holdings (BKC)
Quote : 23.99  0.0 (0.00%) @ 2:05AM

McDonald's 2Q Profit Rises 12% On Continued Sales Gains

Mcdonalds (NYSE:MCD)
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McDonald's Corp.'s (MCD) sales continued to lead the fast-food competition with help from new beverages like frappes, as second-quarter earnings rose 12%.

McDonald's worldwide same-store sales rose 4.8% in the quarter, capped with 4.8% growth in June, although investors were disappointed that the latest month's results weren't more robust. McDonald's shares fell 1.44% in premarket trading to $70.37.

Chief Executive Jim Skinner said that same-store sales trends for July are currently in-line or better than the second-quarter, where, by region, the figure grew 3.7% in the U.S., 5.2% in Europe and 4.6% in its Asia/Pacific, Middle East and Africa segment.

McDonald's U.S. business has been focused on increasing the number of customers that come into its restaurants, whether by adding new products like frappes and smoothies or by abstaining from raising menu prices at all. McDonald's says that demand for smoothies, for instance, has been so successful that it canned plans for stores nationwide to offer free samples because of fears that it wouldn't be able to make enough of the frozen fruit drinks. Frappes, a blended icy coffee drink, have also been hot sellers.

The strategy has helped McDonald's sales outpace its main burger rivals Burger King Holdings Inc. (BKC) and Wendy's, of Wendy's/Arby's Group Inc. (WEN), as they battle for a smaller pool of customers.

McDonald's sales in Europe continue to do well too, despite the emergence of a financial crisis there, due to what the company says is good value across its menu.

The world's largest hamburger chain reported a profit of $1.23 billion, or $1.13 a share, up from $1.09 billion, or 98 cents a share, a year earlier. Revenue increased 5% to $5.95 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of $1.12 on revenue of $5.91 billion.

Operating margin rose to 31% from 29.8%.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;

(Tess Stynes contributed to this article.)


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