McDonald’s Corporation reported a better-than-expected 5.1 per cent rise in global July sales at established restaurants on Monday, as it takes share from rivals with low-priced food and new drinks.Shares in McDonald’s were down 2.2 per cent to $83.25 in midday trading, but still outperformed the broader market and its fast-food competitors.
During July, McDonald’s said it got a boost from sales of smoothies and other drinks in the United States and growth in its breakfast business in Europe. While McDonald’s has been running a tight operational ship for many months, its major rivals are not faring as well.
“These guys are distancing themselves each and every day from the competition,” said Edward Jones analyst Jack Russo.The Dow Jones Industrial Average was off 2.5 per cent on Monday, as the entire market was hit in the first trading day since Standard & Poor’s cut the US credit rating.
McDonald’s “is outperforming its peer group and it’s outperforming the market,” Lazard Capital Markets analyst Matt DiFrisco told Reuters.The world’s largest hamburger chain said sales at restaurants open at least 13 months rose 4.4 per cent in the United States, 5.3 per cent in Europe and 4.0 per cent in Asia/Pacific, Middle East and Africa.The global result for July topped analysts’ average call for an increase of 4.6 per cent, Jefferies & Co analyst Andy Barish said in a client note.
Europe fell short of analysts’ forecast for a rise of 6.6 per cent. Strong results from Germany, Britain and Russia were partially offset by lighter trends in France, Barish said. Europe is McDonald’s biggest sales driver, accounting for about 40 per cent of total revenue.
McDonald’s relatively low prices have helped attract customers in both the United States and Europe as the economy remains weak in those regions.Wall Street has high expectations for McDonald’s, which has been posting sales and profits that are the envy of the global fast-food industry.The Oak Brook, Illinois-based company has been using menu changes, such as adding coffee and other drinks and expanding its offerings of $1 food items, to broaden its appeal beyond the young men who account for the biggest share of sales at most other fast-food chains.
From / Gulf Today