Global economic headwinds temper McDonald's 2Q profit

The 2Q ended in a 4 percent decrease

A slowing global economy and unfavorable foreign-currency translation turned muted growth in revenues and profits negative for the second quarter at McDonald’s Corp.

The Oak Brook, Ill.-based company’s net income for the June 30-ended quarter decreased 4 percent to $1.35 billion, or $1.32 per share, compared with $1.41 billion, or $1.35 per share, a year earlier. Excluding the negative impact of foreign-currency translation, McDonald’s net income would have increased 1 percent.

Revenue was essentially flat at $6.92 billion, compared with $6.9 billion a year earlier. Excluding foreign-currency translation, revenue growth would have totaled 5 percent.

Global same-store sales rose 3.7 percent, comprising gains of 3.6 percent in the United States, 3.8 percent in Europe and 0.9 percent in the Asia/Pacific, Middle East, Africa, or APMEA, division.

Don Thompson, who took over as chief executive July 1, said the company would press on against the difficult macroeconomic environment with the three pillars of McDonald’s “Plan to Win”: Optimizing the menu, modernizing the customer experience and broadening accessibility to the brand.

“McDonald’s global comparable sales remained solid for the quarter while overall results reflected the slowing global economy, persistent economic headwinds and the investments we’ve made to enhance restaurant operations and provide the customers the everyday value they have come to expect from McDonald’s,” Thompson said in a statement. “As we begin the third quarter, global comparable sales for July are expected to be positive, but less than the second quarter.”

The big initiative for McDonald’s in the third quarter will be its official sponsorship of the Summer Olympics, which in the United States would include a new “Favorites Under 400 Calories” menu and a complementary “Win When USA Wins Gold” promotion.

The Favorites Under 400 Calories menu includes many existing items like the chain’s Fruit & Maple Oatmeal, medium McCafé Real Fruit Smoothies, the Premium Grilled Chicken Classic sandwich, the McDouble or a medium order of French fries.

McDonald’s will launch the Win When USA Wins Gold promotion off the new low-calorie menu by offering a game piece to customers with the purchase of any item on that list. The game pieces either reward customers instantly with a free item from the low-calorie menu or supply them with a unique code to enter at the microsite. If American athletes win a gold medal in the sport on a customer’s game piece, that consumer could win one of several prizes, including $25,000 in gold, a trip to London or a new big-screen TV. The contest runs July 24 through Aug. 13.

McDonald’s Corp. operates or franchises more than 33,500 restaurants around the world, including more than 14,000 locations in the United States.

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