said it will miss 2002 earnings estimates, as a result of slumping sales and additional charges to ratchet back certain operations.
On top of a previously announced restructuring, the fast-food giant said Friday that it would exit operations in three countries and close 175 underperforming restaurants. It also set plans to cut up to 600 jobs.
"These actions are the right things to do for McDonald's shareholders, the brand and our business," said CEO Jack Greenberg in a statement. "We remain focused on growing our existing restaurants."
Shares of McDonald's were lately trading down $2.01, or 10.4%, at $17.35.
The restaurant operator said that the additional plans would result in a charge of $350 million to $425 million in the fourth quarter, when analysts are predicting the company would earn 35 cents a share. Wall Street had expected a profit of $1.43 a share for the year, according to Thomson Financial/First Call.
Systemwide sales were $3.5 billion in October, up 3% from $3.4 billion in September, the company said, as a result of service and value efforts. The sales were below previous estimates, however.
"Given the charges and recent sales performance, we will not achieve our previously announced 2002 earnings target," Greenberg said. "Yet, the decisions we've made in the past month will better enable us to focus on our existing assets, grow cash from operations and improve returns for shareholders."
After reporting third-quarter earnings in October, McDonald's said it would scale back its restaurant opening schedule, something analysts had been advocating as a way of reining in costs. The company said it would spend $100 million less on capital expenditures in 2003 than it has this year, and open just 600 traditional McDonald's restaurants, 450 fewer than in 2002 and about 1600 fewer than it opened in 1996.