OAK BROOK, Ill. (AP) – McDonald’s first-quarter profit fell, partly because of sliding sales, costs to close underperforming restaurants and a stronger dollar.
Its adjusted profit beat analysts’ estimates, and the world’s biggest hamburger chain said it is working on a turnaround plan to improve its performance.
The stock climbed more than 2 percent in Wednesday premarket trading.
McDonald’s is pushing to turn around its business, which has seen sales and customer visits decline due to tough competition and perceptions it doesn’t serve real food.
About two weeks ago McDonald’s announced that it is introducing a trio of “Sirloin Third Pound” burgers for a limited time starting later this month, the latest sign the chain is pushing to improve perceptions about the quality of its food.
Already this year, the company has made a number of announcements including a simplified grilled chicken recipe, curbing the use of antibiotics in chicken, and a pay bump and vacation time for workers at company-owned stores.
For the first quarter, McDonald’s earned $811.5 million, or 84 cents per share, for the period ended March 31. That compares with $1.2 billion, or $1.21 per share, a year earlier.
The restaurant operator said that its performance was weighed down by 17 cents per share in charges. The stronger dollar hurt its results by 9 cents per share.
Stripping out these items, earnings were $1.10 per share.
The results beat Wall Street expectations. The average estimate of 15 analysts surveyed by Zacks Investment Research was for earnings of $1.05 per share.
Shares of McDonald’s Corp. added $2.30, or 2.4 percent, to $97.17 before the market open.
Revenue for the Oak Brook, Illinois-based company declined to $5.96 billion from $6.7 billion. Ten analysts surveyed by Zacks expected $6.02 billion in revenue.
Worldwide sales at locations in operation at least 13 months slipped 2.3 percent on lower traffic. The metric dipped 0.6 percent in Europe because of softness in France and Russia.
The Asia-Pacific, Middle East and Africa segment reported an 8.3 percent drop in sales at locations operating at least 13 months mostly because of softness in China and ongoing consumer perception issues in Japan.
In the U.S., the figure fell 2.6 percent as it dealt with tough competition. McDonald’s said that the company continued to simplify its menu in the U.S. during the quarter as well as concentrate on menu items tailored to local tastes.
The chain has said it also plans to expand a program that lets customers build their own burgers by tapping a touchscreen.
McDonald’s is dealing with competition on a number of fronts, including convenience stores that are selling more food and smaller chains such as Chipotle that market themselves as being of higher quality.
Chief Financial Officer Kevin Ozan said in a statement that McDonald’s expects April sales at stores operating at least 13 months will be negative.
McDonald’s President and CEO Steve Easterbrook said that the chain will share initial details of its turnaround plan on May 4.
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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MCD at http://www.zacks.com/ap/MCD
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Keywords: McDonald’s, Earnings Report, Priority Earnings