McDonald's Corp posted stronger-than-expected global sales at established restaurants as demand in Europe rebounded, coming in far above Wall Street estimates. The results sent McDonald's shares up more than 3 percent in morning trading. "Europe was the concern, and Europe blew it through," Oppenheimer analyst Matt DiFrisco said. "That will give people a little bit of increased confidence."
Sales at restaurants in Europe open at least 13 months jumped 7 percent in January, well above the 3.7 percent rise analysts had expected. This was also a significant improvement from December, when sales in the region fell 0.5 percent and rattled investors.
Europe is McDonald's largest market for sales, contributing about 40 percent of revenue. McDonald's attributed the outsize gain in Europe to strong results from Germany, Britain, France and Russia.
The world's biggest hamburger chain also said new products, longer store hours and refurbished restaurants helped bolster results.
Morningstar analyst R.J. Hottovy called the sales rebound encouraging, especially given the threat from austerity measures and continuing economic challenges in the region.
World-wide, January same-restaurant sales were up 5.3 percent, above the 4.4 percent growth analysts had expected.
In the United States, where high unemployment continues to weigh on the fast-food business, sales rose 3.1 percent. That was below the 4.4 percent gain analysts had expected for January, but better than the 2.6 percent rise reported in December. The company's broad menu - which offers low-priced and premium food and drinks that appeal to people of all ages - has helped it outperform rivals that tend to focus on young males, who have been hit particularly hard by job cuts.
McDonald's said hot chocolate and caramel mochas as well as its new hot oatmeal contributed to the January sales increase in the United States, which accounts for about 35 percent of overall revenue. Sales in the Asia/Pacific, Middle East and Africa unit rose 5.2 percent, above the 4.6 percent increase analysts had expected. Results in the region benefited from menu items tailored to local areas, low-priced food and convenience efforts such as drive-thrus.
In December, APMEA's same-restaurant sales jumped 8.9 percent.
Shares of McDonald's were up 3.2 percent at $75.81 on the New York Stock Exchange, where rival Wendy's/Arby's Group was down 1.1 percent.