McDonald’s slides on weak sales

A fireside McRib?

Shares of McDonald’s slid on Friday after the fast-food giant posted lower-than-expected August sales, on weakness in all geographic regions. Same-restaurant sales increased 3.5% worldwide, short of the consensus estimate of a 4.3% increase. The U.S. saw sales increase by 3.9%, short of the 4.0% forecast by analysts despite minimal impact from Hurricane Irene. European sales increased by 2.7%, compared to the consensus of 4.7% while Asia/Pacific, Middle East and Africa saw sales decline by 0.3% while a 3.5% increase was expected. Asian sales were particularly weak, as consumers in Japan continue to adjust in the quake of the March earthquake and tsunami.

Separately, McDonald’s announced it will be spending $1 billion to renovate 1,400 restaurants in Canada. The upgrades are designed to make the restaurants more comfortable and will see fireplaces, flat-screen TVs, Wi-Fi and separate eating areas for big groups being added along with double lane drive-thrus. Additionally, McCafe coffee bars will be added to about 1,200 locations by the end of 2011 as the company looks to take a bite out of Canadian fast-food leader Tim Hortons’ (THI) market share.

McDonald's (MCD : NYSE : US$85.03), Net Change: -3.58, % Change: -4.04%, Volume: 18,333,477

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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