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 company 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.
Mr. Easterbrook said Wednesday that he would unveil the details
of his turnaround plan on May 4.
So far, the changes appear to have had little impact on
sales.
In March, his first month on the job, sales at stores open at
least 13 months fell 3.3%, with the U.S. down 3.9%, Europe off 2.9%
and Asia, the Middle East and Africa sliding 7.3%.
Overall, for the quarter ended March 31, comparable sales 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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