McDonald’s Gets Fried Again: Another Quarter of Sinking Profits

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McDonald’s (NYSE:MCD) shares were sitting at $99.67 at the start of trading on Tuesday morning, after gaining 0.63 percent in pre-market activity. The Oak Brook, Illinois-based company released its 2014 first-quarter earnings before the bell and reported that its profit slipped 5.2 percent in the first three months of the year on account of flattening demand and increasing competition from rivals. Profits fell to $1.2 billion, or $1.21 per share, missing expectations; analysts expected $1.24 per share. In the year-ago quarter, McDonald’s reported first-quarter profit of $1.27 billion, or $1.26 per share.

Comparable sales at U.S. restaurants open a year — considered a good indicator of a company’s health — also declined 1.7 percent for the first quarter of 2014, and McDonald’s attributed the drop to “negative comparable guest traffic amid challenging industry dynamics and severe winter weather.”  The world’s largest fast food chain performed better i markets outside the U.S., helping it earn a more optimistic global sales figure that sat up 0.5 percent for both the first quarter and the month of March, but McDonald’s still maintained Tuesday that it needs to focus on stabilizing key markets like the U.S., Germany, Australia, and Japan.

Source: McDonald’s

McDonald’s revenue gained 1.4 percent in the first quarter, coming to $6.7 billion, which was shy of the $6.71 billion Wall Street expected. The fast food chain’s costs also rose, at 2.3 percent, resulting in the more disappointing profit figure. Though investors have showed exasperation at McDonald’s quarter after quarter of discouraging reports company CEO Don Thompson said following the earnings release: “In today’s dynamic global marketplace, our goal is to ensure that we are evolving to remain a relevant and trusted brand by serving great-tasting, high-quality, affordable food and creating memorable experiences with our brand.

“By leveraging a deeper understanding of what our customers want with the power of our business model, our investments in restaurant capabilities and modernization, and our hard-earned competitive advantages, we will grow McDonald’s business and deliver enduring profitable growth over the long term.”

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