McDonald's same-store sales rise
McDonald's Corp <mcd.n> reported a 6.9 percent rise in April sales at restaurants open at least 13 months, as strength in the United States helped offset the impact of the stronger dollar.
April same-store sales were up 6.1 percent in the United States, helped by new coffee drinks and snacks.
The No. 1 hamburger chain is one of the restaurant industry's top performers due in large measure to its Dollar Menu luring in cost-conscious diners.
The data from McDonald's landed as the U.S. government's payroll report said domestic employers cut a smaller-than-expected 539,000 jobs in April -- the smallest number since October.
The stronger U.S. dollar, which lessens the dollar-value of sales made overseas, led to an overall 1 percent decline at worldwide McDonald's restaurants, the company said. Sales rose 8.9 percent in constant currencies.
April trends confirm that McDonald's is pulling away from the pack in terms of sales momentum, UBS analyst David Palmer said in a research note. By the end of 2009, we believe that is also likely to be true for EPS growth as well.
Standard & Poor's Equity Research analyst Mark Basham said the results suggested that McDonald's continued to gain market share in the United States.
Fast-food restaurants generally have held up better in the recession than higher-priced sit-down restaurants.
But not all fast-food sellers have been immune to the impact of the downturn. The U.S. fast-food industry saw its first quarterly traffic decline since 2003 in the quarter ended in February, according to market research company NPD Group.
On April 15, Burger King Holdings Inc <bkc.n> said its same-store sales had improved in that month after rising 1 percent in the latest quarter.
On Thursday, Wendy's/Arby's Group <wen.n> said that for the quarter ended March 29, sales at established North American restaurants rose 1 percent at Wendy's and fell 8.7 percent at Arby's.
McDonald's April same-store sales rose 8.4 percent in Europe, helped by the shift of the Easter holiday to April from March, and rose 6.5 percent in the company's Asia/Pacific, Middle East and Africa segment.
Strong results continue in Australia and Japan, but China was negative, J.P. Morgan analyst John Ivankoe said in a client note.
Last month, McDonald's Chief Executive Jim Skinner said economic weakness in China has impacted our sales and margins, especially in southern China where manufacturers have closed.
As a result, the company planned to lower lunch prices to compete with Chinese fast-food chains that sell for 30 percent to 40 percent less.
McDonald's shares were up $1.70, or 3.2 percent, at $55.09 on the New York Stock Exchange. Rival Burger King was up 52 cents, or 2.9 percent, at $18.21, and Wendy's/Arby's rose 14 cents, or 3.1 percent, to $4.66.
Jefferies & Co analyst Jeff Farmer noted that McDonald's shares are up 5 percent over the last eight weeks, well below the 50 percent rally seen by the broader restaurant group.
Badly battered shares in casual dining chains like Cheesecake Factory Inc <cake.o> and P.F. Chang's China Bistro
contributed to the overall industry's gain after cost controls produced better-than-expected results, despite significant declines in same-store sales.
(McDonald's) has been left behind during the current early cycle consumer discretionary rally - but the summer could be kinder, Farmer said.
(Reporting by Brad Dorfman and Lisa Baertlein, editing by Dave Zimmerman, Derek Caney, Leslie Gevirtz)
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