McDonald's April sales rise but miss expectations

AP News
Posted: May 08, 2012 12:14 PM
McDonald's April sales rise but miss expectations

McDonald's Corp. said Tuesday that a key revenue figure rose in April as strength in the U.S. and parts of Europe helped offset weakness in Japan. But the results fell short of Wall Street expectations and the fast food chain's own guidance.

Although McDonald's has consistently outperformed its rivals, the company is facing the same pressures from the turbulent global economy and rising costs for ingredients that are squeezing the entire industry.

The world's largest hamburger chain says global sales rose 3.3 percent at stores open at least 13 months in April. That was short of the 4.1 percent rise analysts expected, according to Thomson Reuters, as well as the 4 percent rise McDonald's had forecast.

The figure is a key metric because it excludes the impact of newly opened or closed stores.

In the U.S., the figure rose 3.3 percent with the help of new extra value menu offerings like the 20-piece Chicken McNuggets. The Oak Brook, Ill.-based company said new drinks and breakfast offerings were also popular.

The sales figure rose 3.5 percent in Europe on strength in France, the United Kingdom, Germany and Russia. In the region encompassing Asia/Pacific, the Middle East and Africa, the sales figure rose 1.1 percent; McDonald's said positive results in China were offset by negative results in Japan.

McDonald's CEO Jim Skinner expressed confidence in a statement that the chain's evolving menu and revamped stores will continue to attract consumers "amidst a challenging global economy."

Sara Senatore, an analyst with Sanford C. Bernstein & Co., noted that the recession in the company's key European market, as well as choppy recovery elsewhere in the developed world, pressured the company's results for the month.

In a note to investors, she said consumers' "intense value focus" _ particularly in Japan and Australia _ also dragged down results.

Year to date, sales at stores open at least 13 months is up 6.2 percent, including a 7.4 percent rise in the U.S., 4.6 percent rise in Europe and 4.3 percent rise in the region encompassing Asia/Pacific, the Middle East and Africa.

McDonald's sales figures came as rival The Wendy's Co. reported first quarter results that missed expectations on higher costs for ingredients like beef and weaker-than-expected sales.

Shares of McDonald's fell $1.45 to $94.06 in afternoon trading. The stock had been down 5 percent since the beginning of the year.