Top Business News

Return to Article

Street Not Lovin' It; McDonald's Stock Slides

Jeanine Poggi

Consumers are still lovin' it -- only slightly less than they were lovin' it before. McDonald's(MCD Quote) growth appears to be waning, despite positive May same-store sales numbers.

The fast-food chain said comparable sales for the month grew 5.1%, but that's less than the 6.9% jump seen in April.

And investors' disappointment was evident, sending shares down 3% to $58.22 in morning trading.

While international sales for the company remained strong -- with a 7.6% jump in Europe and 6.4% increase in Asian Pacific, Middle East and Africa -- McDonald's U.S. same-store sales climbed only 2.8%.

The company received a boost in the U.S. from the aggressive roll-out of McCafe, but it was significantly slower than the 6.1% jump in April. Analysts expected about a 3% increase in U.S. same-store sales.

McDonald's has been better able to weather the recession than its competitors, such as Burger King(BKC Quote) and Wendy's/Arby's(WEN Quote), as its dollar menu has given the company an added boost in these days of skinny wallets.

Still, McDonald's expects its second-quarter earnings to be hurt by about 8 cents to 9 cents, and 20 cents for the year, if exchange rates remain at current levels.

While the company does not offer guidance, analysts expect a profit of 95 cents in the second quarter and $3.81 for the full year.