By Chelsey Dulaney
McDonald's Corp. reported a 2.6% drop in a key revenue metric in
the U.S. during its first quarter, as new promotions and products
couldn't offset competitive pressure.
Overall, the fast-food giant reported a steeper-than-expected
drop in profit amid foreign currency impacts and restructuring
charges. But total revenue was in-line with Wall Street
expectations, sending shares up 2.3% to $97 in premarket
trading.
The results come as the fast-food chain embarks on a turnaround
under new Chief Executive Steve Easterbrook
Mr. Easterbrook took the helm at the fast-food giant in March
and has helped instill confidence in investors--with shares up over
the past three months.
Mr. Easterbrook's moves so far in the U.S. include a plan to
raise wages for McDonald's restaurant workers, an effort to curb
antibiotic use in its chicken, testing of all-day sales of
breakfast items, and the launch of premium chicken sandwiches and
sirloin burgers. The efforts, however, have drawn the ire of some
of the franchisees who run the vast majority of McDonald's
restaurants and question whether they can afford to implement the
plans.
The changes appear to have had little impact on sales during the
first three months of the year.
Sales at stores open at least 13 months fell 2.6% in the U.S.
division and 2.3% globally, as traffic fell across all major
segments. Consensus Metrix had forecast a declines of 2.1% and
1.8%, respectively.
Comparable sales fell 8.3% in the Asia-Pacific division, where
it is struggling with perception issues after food-safety scares in
China and Japan. Consensus Metrix had forecast a 6.5% decline in
the region.
Looking forward, McDonald's forecast that its April comparable
sales would be negative.
Overall, McDonald's reported a profit of $811.5 million, or 84
cents a share, down from $1.2 billion, or $1.21 a share, a year
earlier. The results included 17 cents per share related to
write-offs and restructuring and 9 cents a share related to foreign
currency.
Revenue fell 11% to $5.96 billion.
Analysts polled by Thomson Reuters had expected earnings of
$1.06 a share on revenue of $5.96 billion.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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