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TheStreet Open House

McDonald's CEO: 2013 Earnings Will Remain 'Challenged'

NEW YORK ( TheStreet) -- McDonald's (MCD) shares slid 3% under the $100 mark after the global hamburger chain posted disappointing second-quarter earnings and warned that the rest of the year also would be "challenged."

The Oak Brook, Ill.-based company said net income of $1.39 billion rose 4% from the year-earlier period, however, earnings of $1.38 a share missed analysts' consensus by 2 cents. Revenue also came in shy, rising just 2% to $7.08 billion versus the $7.09 billion expected by analysts.

Shares were down 2.8% to $97.49 at last check on Monday.

"We remain strategically focused on the global growth priorities that help us better serve our customers," said McDonald's President and CEO Don Thompson in the earnings release. "While the informal eating out market remains challenging and economic uncertainty is pressuring consumer spending, we're continuing to differentiate the McDonald's experience by uniting consumer insights, innovation and execution."

A 1% rise in global and U.S. same-store sales was offset by negative results in Europe and the Asia Pacific, Middle East and Africa regions, the company said.

McDonald's said U.S. comparable sales "continued to outpace the competition," but the gain was small compared to the year before, which had promotional activity in the period.

The fast-food chain is likely seeing strong competition in the U.S. from the growing so-called fast casual restaurant segment. Fast-casual restaurants like Chipotle (CMG) sit in between quick-service establishments like McDonald's and Yum Brands' (YUM) Taco Bell, Pizza Hut and KFC, and full-service dining options like DineEquity's (DIN) Applebee's.

Thompson's outlook for the rest of the year wasn't exactly encouraging to investors.

"While our consolidated results this quarter were positive, global comparable sales for July are expected to be relatively flat," Thompson said in the release. "Based on recent sales trends, our results for the remainder of the year are expected to remain challenged. Throughout McDonald's history, we have succeeded in a variety of operating and economic environments. I am confident that our system, global infrastructure and the unique and evolving McDonald's brand experience will enable us to deliver sustained profitable growth for the long-term.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.



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