McDonald’s faces the heat of weak revenue

July 23, 2013 | By RetailME Bureau

Global foodservice retailer the McDonald’s Corporation recorded weak revenue as its shares plummeted the most in nine months after it posted second-quarter profit. According to analysts, economic weakness will continue to hurt the company results for the remainder of the year.

“While we are trying to attract customers with less expensive meals such as dollar menu food in the US and combo meals in Europe, based on recent sales trends, our results for the remainder of the year are expected to remain challenged. Our July same-store sales are projected to be unchanged from last year. Sales at global stores open at least 13 months rose only 1% in the quarter, matching the average estimate of analysts surveyed by Consensus Metrix,” reveals Donald Thompson, McDonald’s CEO, in a statement.“Several currencies weakened against the dollar during the quarter and currency translation will negatively affect the company’s 2013 profit by seven-to-nine cents a share,” adds McDonald’s CFO Peter Bensen.

In the US, McDonald’s has been affected by a consumer environment where unemployment has been stuck above 7.5% for 54 straight months and increasing competition from rivals who also are introducing new value items. Besides the US, McDonald’s comparable store sales declined 0.1% in Europe where it faces cash-strapped consumers and 0.3% in the company’s Asia-Pacific and the Middle East and Africa region during the quarter.




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