By Julie Jargon
McDonald's Corp. is scheduled to announce its third-quarter
earnings and September same-store sales before the market opens on
Tuesday. Here's what you need to know:
EARNINGS FORECAST: Net income of $1.37 a share is the consensus
of analysts surveyed by Thomson Reuters, compared with $1.52 a year
earlier. McDonald's last month said a recent supplier scandal in
China that dinged its August same-store sales in Asia will reduce
third-quarter profit by about 15 cents to 20 cents a share versus
year-ago results.
SAME-STORE SALES AND REVENUE FORECAST: Analysts as of Monday
were expecting global same-store sales for the quarter to decline
by 3%, with the biggest drop in its Asia/Pacific, Middle East and
Africa, or APMEA, division, according to Consensus Metrix. Global
same-store sales for September are expected to decline by 3.2%.
Quarterly revenue is expected to be $7.19 billion, compared with
$7.32 billion a year earlier.
WHAT TO WATCH:
--CHINA SALES: McDonald's has been struggling to regain consumer
confidence across Asia after Chinese authorities accused a Chinese
supplier this summer of intentionally selling expired meat to
McDonald's and other fast-food outlets. Continued media coverage of
the scandal and consumer skittishness led to a 14.5% drop in
same-store sales in the APMEA division in August. Analysts expect
another 11% decline in the region for September, bringing quarterly
same-store sales in APMEA down 10.6%.
--HOME MARKET: McDonald's has more than 14,000 restaurants in
the U.S., making it the heart of the company's business.
Competition in the domestic market has been intense, with
traditional rivals such as Taco Bell and Burger King upping their
game and Chick-fil-A expanding. Some of McDonald's core
customers--those in their late teens to mid-30s--have defected to
fast-casual chains that offer fresh food. And a bloated menu that
slowed service also has hurt the chain at home. The result:
same-store sales in the U.S. have been falling, and analysts are
expecting a decline of nearly 3% for the quarter and 2.8% for
September.
--RUSSIA: Russian authorities aren't lovin' McDonald's. The
government has been inspecting McDonald's restaurants across the
country for alleged sanitary violations and has closed several
restaurants in Moscow. Although Russia is a relatively small market
for McDonald's, with just 435 of its more than 35,000 global
restaurants, the problems there are a distraction for a company
grappling with so many other issues. Overall, McDonald's quarterly
same-store sales in Europe are expected to be down less than
1%.
Write Julie Jargon at julie.jargon@wsj.com
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