McDonald's Corp on Friday said quarterly profit met its recent forecast as strong US breakfast sales and an improved European business boosted revenue, though net income fell 14 percent due to a large year-earlier gain.
McDonald's is still benefiting from a three-year-old turnaround strategy that has revitalised sales at its more than 30,000 restaurants with new products like chicken sandwiches and salads, extended hours, cashless payments, and its "I'm Lovin' It" global marketing campaign.
But the fast-food company's stock fell about 1.5 percent after the report, in part because selling, general and administrative costs rose during the quarter.
McDonald's blamed costs related to its sponsorship of the Winter Olympics for the increase, and said general and administrative expenses would also be up in the second quarter due to a franchisee convention. For the year, however, SG&A as a percentage of sales is expected to be down, McDonald's said.
Net income for the first quarter ended March 31 fell to $625.3 million, or 49 cents per share, from $727.9 million, or 56 cents per share, a year ago. Last year's results included a gain of 13 cents per share for the settlement of a tax audit.
The world's largest restaurant company said last week it expected to report earnings of about 49 cents a share for the period, in line with Wall Street analysts' average estimate.
A stronger US dollar and charges for closing 25 restaurants in the United Kingdom and acquiring some outlets from Brazilian franchisees trimmed results during the quarter. That impact was partially offset by a gain from the spin-off of McDonald's Chipotle Mexican Grill chain.
During the first quarter, US breakfast sales increased due to the introduction of a new, stronger coffee blend. The chain also added a spicy chicken sandwich to its menu during the period, and this week introduced an Asian-style salad.
In Europe, McDonald's turnaround has been slower, though results in France and Germany have improved. The company is still having difficulty in the United Kingdom, where it has said it faces a soft retail environment and poor consumer perception of its food.
Revenue rose 6 percent to $5.1 billion, or climbed 8 percent excluding the impact of foreign currency translation. Same-store sales, a key retail measure that tracks sales at restaurants open at least 13 months, rose 5.2 percent.
Comments
Comments are closed.