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Monday 10 June 2013

McDonald's New Menu A Hit In U.S., But May Sales Still Weak In Asia


New menu additions allowed McDonald's MCD +1.54% to record stronger-than-expected sales in May, though revenue remained disappointing in Asia.
Sales at established locations rose 2.6% last month, more than the 1.9% that analysts expected. Same-store sales are an important measure of a chain’s health because it strips away volatile numbers from newly opened or closed locations.
In America, consumers ate up the revamped menu. McDonald’s added items like its Egg White Delight sandwich and Chicken McWraps and boosted the advertising behind its value offerings. Same-store U.S. sales gained 2.4%, more than analysts’ projection for 2.1%.
Unlike in the U.S., sales in the Asia/Pacific, Middle East and Africa region were disappointing. Sales increased by 0.9%. By comparison, analysts forecast a 1.5% rise. While it’s important for McDonald’s to return to growth in this area, after months of negative figures, May’s growth stands starkly in contrast with past years, in which McDonald’s would grow by double-digits. China blamed some of the situation on the avian flu outbreak.
In Europe, same-store sales gained 2%, ahead of analysts’ 1.2% estimate.
Shares of McDonald’s gained 1.7% to $99.97. McDonald’s stock lags the S&P 500 this year, rising 11.4% versus the index’s 15.2%. McDonald’s, the world’s largest hamburger chain, has seen its market share eaten away by resurgent rivals Burger King and Wendy’s. Both of these smaller burger companies took pages from McDonald’s playbook, adding premium menu choices and renovating store locations. And McDonald’s faces changing consumer tastes for fast-casual options like Panera Bread and Chipotle.

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