) witnessed a 3.3% upside in global comparable sales (comps)
for the month of April that lagged the year-ago level of 6% as well
as the company's expectation of 4%. The fast-food restaurant
operator witnessed a relatively downward movement across all three
geographical segments namely the United States, the U.K. and APMEA
on a yearly basis. While the United States and Europe gave a
similar performance, the Asia/Pacific, Middle East and Africa
(APMEA) region was the main dampener in the month.
In the United States, comps grew 3.3% versus 4.0% in April 2011.
The comps in April 2012 were backed by strong customer demand for
Chicken McNuggets which was included in extra value menu. Core
offerings like breakfast menu, the McCafe beverage line-up as well
as premium chicken sandwich and Angus burger were the other major
contributors in the month.
Europe saw a growth of 3.5% as opposed to 6.5% in April 2011.
The growth was backed by stronger performance in the U.K., France,
Germany and Russia. Promotional food events and a restaurant
reimaging program were responsible for the month's performance.
The reported month's comparable sales nudged up 1.1% in
Asia/Pacific, Middle East and Africa (APMEA) versus 6.5% in the
year-ago month. A somewhat healthy performance was palpable
primarily in China and some other markets. However, Japan continued
to be a dampener. Continued focus on daypart value options, variety
in menu as well as locally relevant items drove the segment.
System-wide sales increased 3.3% (5.5% in constant currencies)
in the month under review.
The Oak Brook, Illinois-based company's recent comps came as a
shock after continued comps strength. Management noted that
Japan's results were not smooth as the country continues to recover
after the natural calamities last year following which consumers
are refraining from dining out.
McDonald's has so far endured the recent economic turmoil in
Europe. However, management believes the implementation of
austerity measures could now put pressure on its sales and
earnings. With the focus on value proposition along with less
pricing power, margins will likely be hassled, going ahead. In
addition, high levels of unemployment are projected to continue in
the foreseeable future.
However, the company continues to strengthen its beverage
offerings, which have become its growth engine. Beverages are also
important outside the United States. Remodeling remains another
bright spot on McDonald's 2012 agenda.
McDonald's currently retains a Zacks #3 Rank (short-term Hold
rating). We are maintaining our long-term Neutral recommendation on
the stock. The company's competitors include
The Cheesecake Factory Inc.
Yum! Brands Inc.
MCDONALDS CORP (MCD): Free Stock Analysis
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