McDonald’s Profit Falls 3.5% as U.S. Growth Slows

McDonald’s the world’s largest restaurant chain by sales, reported third-quarter profit fell 3.5 percent as sales growth slowed at U.S. stores.

Net income dropped to $1.46 billion, or $1.43 a share, from $1.51 billion, or $1.45, a year earlier, the Oak Brook, Illinois-based company said today in a statement. Foreign- currency exchange-rate fluctuations reduced net income by 8 cents a share in the third quarter. Analysts projected $1.47, the average of 26 estimates compiled by Bloomberg.

Chief Executive Officer Don Thompson, who took the helm in July, has tried to draw budget-conscious Americans with a new extra-value menu. Sales at U.S. stores open at least 13 months rose 1.2 percent in the quarter, marking the slowest growth in 11 quarters. Analysts projected an increase of 1.7 percent, according to 21 estimates compiled by Consensus Metrix.

Increased competition among U.S. fast-food restaurants has “left McDonald’s with less room for marketing errors,” David Palmer, an analyst at UBS Securities LLC who advises buying the shares, wrote in a note before earnings. “The pullback from dollar-menu marketing and lack of premium innovation left the chain vulnerable to increased couponing and innovation by its major competitors.”

The shares fell 2.7 percent to $90.31 at 8:05 a.m. in New York. McDonald’s dropped 7.4 percent this year through yesterday.

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Posted on October 21, 2012, in Other. Bookmark the permalink. Leave a comment.

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