McDonald's: Strong Dollar Might Cut Profit

McDonald's said that February global same-store sales increased 1.4%, but currency rates could hurt first-quarter results.
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Updated from 10:37 a.m. EDT

McDonald's

(MCD) - Get Report

said Monday that global same-store sales rose 1.4% last month, but that foreign currency rates are expected to hurt first-quarter revenue and earnings.

The fast-food chain said that if foreign currency rates remain at current levels, with the dollar strong relative to its competitors, the translation may decrease first-quarter revenue by at least $600 million and earnings by 7 cents to 9 cents a share.

"In addition, as previously stated, commodity cost pressures are expected to have a greater impact during the first half of the year," the company said in a statement.

McDonald's also said that first-quarter results will include an after-tax, nonoperating gain of 3 cents to 4 cents a share stemming from the sale of the company's minority interest in RedBox Automated Retail, a chain of self-service DVD rental vending machines. McDonald's said it has tentative plans to post first-quarter results on April 22.

"We remain confident in the fundamental strength of the McDonald's business," CEO Jim Skinner said in a statement. "We have the right strategies in place to grow the business for the long-term and we have the operating experience to manage through the current environment."

The news came alongside McDonald's same-store sales report for February, which showed that the company enjoyed strong comparable sales results despite harsh economic headwinds. The company said sales rose 1.4% last month, which reflects an extra day in February 2008 because of leap year. Excluding that difference, same-store sales rose about 5.4%.

U.S. sales increased 2.8% thanks to strength in McDonald's chicken and core menu offerings. Excluding the calendar shift, sales were up 6.8% in the U.S.

In Europe, comparable sales slipped 0.2% for the month, but increased 4% when excluding the extra day in February 2008. In the Asia/Pacific, Middle East and Africa, February same-store sales were up 0.7%, or 4.1% excluding the leap year impact.

Shares of McDonald's added 20 cents, or 0.4%, to end the day at $52.32. Rival

Burger King Holdings

(BKC)

dipped 0.6% to close at $21.30, and

Wendy's/Arby's Group

(WEN) - Get Report

dropped 5.4% to finish at $3.88.