McDonald's returns to profitability in 2nd-quarter
NEW YORK -- McDonald's Corp. said Wednesday it returned to profitability in its second quarter, helped by a gain from selling its interest in sandwich chain Pret A Manger and strong sales of breakfast items, chicken sandwiches and beverages.
The nation's No. 1 hamburger chain said it earned $1.19 billion, or $1.04 per share, compared with a loss of $711.7 million, or 60 cents per share in the year-ago quarter.
(AP)
The loss a year earlier stemmed from hefty charges from McDonald's selling its Latin America and Caribbean businesses to a licensee. Once those charges were taken out, the company earned 71 cents per share.
This year's second-quarter profit included a gain of 10 cents per share from the sale of its stake in Pret A Manger. Excluding that gain, the company earned 94 cents per share.
Analysts polled by Thomson Financial had expected earnings of 86 cents per share.
The Oak Brook, Ill.-based company said revenue rose 4 percent to $6.08 billion from $5.84 billion a year ago, beating analysts' predictions for $5.92 billion.
Same-store sales grew in every region, with global same-store sales rising 6.1 percent. The measure of sales at locations open at least a year is an important performance indicator since it measures growth at existing locations rather than newly opened ones.
In Europe, same-store sales jumped 7.4 percent. They rose 8.8 percent in the Asia/Pacific, Middle East and Africa division.
U.S. same-store sales rose 3.4 percent for the quarter -- a sign that cash-strapped consumers continued to spend at the chain even as other restaurant companies see sales trail off as fewer customers walk through the door.
Consumers, hit by inflation, the weak housing market and a lack of confidence in the economy, have begun cutting back on all discretionary spending. Restaurants have taken a big hit, in part because many consumers see eating at home as a cheaper option than a meal out.
McDonald's said it benefited from being able to give customers convenience and value, specifically crediting its breakfast items, new chicken offerings and beverages with the sales increase. During the quarter, McDonald's introduced a new chicken biscuit sandwich for breakfast, a chicken sandwich for lunch and espresso-based coffee drinks in some locations.
Investors have been eagerly awaiting the U.S. sales figures as a way to gauge whether the fast food chain can withstand a tough economy. McDonald's reported its first monthly decline in U.S. same-store sales in the first quarter, leading some to wonder whether even the Golden Arches was being hit by consumers' reluctance to spend.
But in the second quarter, McDonald's eased some of those concerns by reporting same-store sales increases every month. For June, the company said same-store sales rose 5.6 percent for the month overall and jumped 3.8 percent in the U.S.
Shares in McDonald's rose $1.63 to $61.75 in electronic pre-market trading. The stock closed at $60.12 Tuesday.
