Fast-food chain McDonald's Corp on Monday posted stronger-than-expected July sales thanks to solid demand in France and Germany, sending its stock up 3 percent. Wall Street analysts had expected an increase ranging from 2 percent to 3 percent, according to research reports.
"Europe was the major surprise for the month," Larry Miller, an analyst with Prudential Equity Group, wrote in a note to clients.
Miller, who rates the stock "overweight," said he did not raise his profit forecast but the surprisingly strong sales "provide an upward bias to our estimates."
Analysts expect sales growth to remain robust in August as McDonald's promotes a new line of premium chicken sandwiches in the United States. Miller said the sandwiches appeared to be selling well in late July, even before an advertising campaign was launched in early August.
McDonald's said global July sales rose 4.9 percent at its namesake hamburger restaurants open at least 13 months.
In the United States, McDonald's largest market, same-store sales also rose 4.9 percent, marking the company's 28th consecutive month of sales growth. Analysts had been expecting a rise of 3 to 4.3 percent.
In the company's No 2 market, Europe, same-store sales were up 5.3 percent, well above analysts' expectations ranging from 0.7 percent to 1.5 percent.
McDonald's said sales were particularly strong in France and Germany thanks to demand for premium sandwiches, including the Big Tasty hamburger, and lower-priced offerings such as Les Petit Plaisir chicken sandwiches in France.
Some analysts had expected only modest gains in Europe because of the London bombings that prompted some people to avoid the city's transit system. McDonald's made no comment about sales in Britain, but Miller said sales there were down.
In the company's Asia-Pacific, Middle East and Africa region, comparable sales rose 4.1 percent, led by a strong performance in Australia.
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