By Ben Fox Rubin
McDonald's Corp. said its profit for the first three months of
the year dropped 5.2% as the fast-food giant worked to revive its
U.S. sales growth following a challenging 2013.
The results missed expectations.
Chief Executive Don Thompson has suggested that the company has
lost relevance with some customers and needs to strengthen its menu
offerings. He emphasized Tuesday that McDonald's is focused on
stabilizing key markets, including the U.S., Germany, Australia and
Japan.
Comparable sales at U.S. restaurants open more than a year
declined 1.7% for the quarter and 0.6% for March, the fifth
straight month of declines.
The company pointed to weaker guest traffic amid challenging
industry dynamics and severe winter weather. It also reiterated its
commitment to improving U.S. results, in part through customer
engagement and menu choices.
Global comparable sales edged up 0.5% for both the quarter and
month, helped by higher average checks, despite weaker guest
traffic in several key markets.
Looking to April, Mr. Thompson said global comparable sales are
expected to be modestly positive.
Franchisees and executives have said the McDonald's menu has
become overly complicated, with the addition of more new items
slowing service and turning off customers. Despite struggles in
2013, Mr. Thompson recently said he expects improvement this
year.
Overall, McDonald's reported a first-quarter profit of $1.2
billion, or $1.21 a share, down from $1.27 billion, or $1.26 a
share, a year earlier. The company partly attributed the decline to
the impact of prior-year income tax benefits.
Total revenue for the quarter edged up 1.4% to $6.7 billion,
though costs rose faster, at 2.3%.
Analysts polled by Thomson Reuters forecast earnings of $1.24 a
share on revenue of $6.72 billion.
In Europe, same-store sales grew 1.4%, as positive sales
performance in the U.K., France and Russia was partially offset by
ongoing weakness in Germany.
The Asia/Pacific, Middle East and Africa region's same-store
sales edged up 0.8%, reflecting strength in China offsetting
weakness in Japan.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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