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McDonald’s Posts Smaller-Than-Expected Fall In Comparable Sales

Posted by Reuters  |  January 23,2015  |  09:31 AM
McDonald's restaurant

REUTERS/Mike Blake

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9:31 AM

01/23/15

(Reuters) – McDonald’s Corp reported a smaller-than-expected fall in U.S. and global same-restaurant sales and announced its lowest capital spending budget in more than five years, saying it planned to open fewer restaurants in its troubled markets.

Sales at U.S. restaurants open at least 13 months fell 1.7 percent in the fourth quarter. Analysts on average had expected a fall of 2.1 percent, according to research firm Consensus Metrix.

Global same-restaurant sales fell 0.9 percent compared with average analyst estimate of a 1.5 percent fall.

Shares of the world’s biggest restaurant chain were little changed in premarket trading on Friday.

McDonald’s set a capital spending target of about $2 billion for this year as it looks to recover from a food scandal in China and fend off intense competition in the United States.

International sales plunged after the food scare, a shortage of potatoes for its french fries in Venezuela and the forced temporary shutdown of some of its outlets in Russia.

Sales in China fell sharply after a supplier was found to be using expired and contaminated chicken and beef in July.

More recently, customers in Japan said they found items such as plastic and even a tooth in their food.

The company also had to offer restricted portions of french fries to customers in Japan last month as a protracted labor dispute at U.S. West Coast ports contributed to long delays in imports.

In the United States, McDonald’s has been losing customers to fast-casual chains such as Chipotle Mexican Grill and Shake Shack Inc .

McDonald’s net income fell to $1.1 billion, or $1.13 per share, in the quarter ended Dec. 31 from $1.40 billion, or $1.40 per share, a year earlier.

Revenue fell 7.3 percent to $6.57 billion.

Analysts on average had expected a profit of $1.22 per share and revenue of $6.68 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Kirti Pandey)

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