Sales Slide At McDonald’s Corporation (NYSE:MCD)


McDonald’s Corporation (NYSE:MCD) reports that overall sales fell 8% last month amid challenges that include changing consumer taste in the U.S., geopolitical unrest in Europe, and scandals in Asia. The latest plunge in sales is a clear indication that the new CEO already has their work cut out for them in trying to steer the company back to growth.

In the U.S., McDonald’s Corporation (NYSE:MCD) reported a 4% decline in same-store sales, a key performance indicator. Analysts, on average, expected a 0.7% decline in U.S. same-store sales in the month. McDonald’s recorded weak sales in the U.S. despite massive efforts to promote sales in the market. Bad weather and preference for more healthy foods are some of the issues that impacted U.S. sales in the month under review.

According to the management, the weak sales noted last month are an indication that there is a need to reset the company’s priorities and align offering to consumer’s demand. The company’s new CEO, Steve Easterbrook, has already made clear his intentions to update McDonald’s and make it a modern burger company.

International sales

Globally, McDonald’s Corporation (NYSE:MCD) same-store sales dropped 1.7% compared to the expected decline of 0.3%. In Asia-Pacific, Middle East and Africa, same-store sales fell 4.4%, yet analysts expected a decline of 3.1%. Supply chain issues are hurting McDonald’s sales in Asia. One of the company’s meat suppliers has been adversely mentioned in a food safety scandal, which is responsible for the overall weak sales in the APMEA region.

Same-store sales in Europe rose slightly by 0.7%, beating the expectations of analysts. The gain in Europe was attributed to better sales in the U.K. and Germany, which helped offset the adverse impact in Russia.

Near-term sales catalyst

Although McDonald’s Corporation (NYSE:MCD) is pushing hard to reboot sales, some analysts are not able to see near-term catalysts. Lynne Collier of Sterne Agee, for instance, told investors in a note, that despite the changes in the works, they cannot identify a catalyst to spur sales in the near-term.

McDonald’s recently held talks, with U.S. franchisees to try and boost morale and discuss ideas to woo back customers to their restaurants. The new CEO, Easterbrook, also announced plans to avoid antibiotic chickens in the U.S., a step that is hoped to woo customers seeking healthy foods.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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