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McDonald’s Sales Trail Estimates as Asia Results Drop (Update4)
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By Courtney Dentch

Dec. 8 (Bloomberg) -- McDonald’s Corp. fell the most in more than four months after global November sales showed the smallest monthly gain in at least five years, missing analysts’ estimates.

McDonald’s fell $1.32, or 2.1 percent, to $60.61 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest drop since July 23. The shares have lost 2.5 percent this year.

Sales at global stores open at least 13 months rose 0.7 percent. U.S. sales declined 0.6 percent, while Europe climbed 2.5 percent, the Oak Brook, Illinois-based company said in a statement today. Sales in Asia, the Middle East and Africa fell 1 percent.

It was the second straight month of declines in U.S. sales as consumers curbed spending and as high unemployment rates trimmed sales at breakfast and lunch. Orders off the company’s dollar menu have been hurt by rivals’ offers, such as Burger King Holdings Inc.’s $1 double cheeseburger. The Asia region posted its first decline since August as Japan and China sales slowed.

“They’re sequentially slowing from a year ago,” said Matt DiFrisco, a restaurant analyst with Oppenheimer & Co. in New York. He has a “market perform” rating on the stock. “They’ve really been feeling the pinch from Burger King’s double cheeseburger offer.”

Projected Gains

Global sales were expected to rise 2.2 percent, the average of estimates from analysts at Oppenheimer, Janney Montgomery Scott LLP and Robert W. Baird & Co. U.S. sales were predicted to fall 0.4 percent. The analysts projected gains of 5.3 percent in Europe and 2 percent in Asia, the Middle East and Africa.

The restaurant chain is facing “tough comparisons” in the year-earlier period, said Steve West, an analyst with Stifel Nicolaus & Co. in St. Louis. McDonald’s posted worldwide sales gains of 7.7 percent a year ago, led by a 13.2 increase in Asia, the Middle East and Africa.

“On a two-year basis they’re still very strong and they’re not going to get credit for that in today’s stock movement,” said West, who recommends buying shares. “They’re decelerating, but they’re still in pretty good shape.”

To contact the reporter on this story: Courtney Dentch in New York at [e-mail].
Last Updated: December 8, 2009 16:29 EST