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Mcdonalds suffers losses Original Source Link: (May no longer be active)
http://biz.yahoo.com/ft/030123/1042491114516_2.htmlhttp://biz.yahoo.com/ft/030123/1042491114516_2.html
McDonald's suffers first-ever losses
Thursday January 23, 2:15 pm ET
By Neil Buckley in New York
McDonald's on Thursday announced its first quarterly loss since going public in 1965, and scrapped its double-digit earnings growth targets.
The world's largest hamburger chain said it was closing 719 underperforming restaurants, mainly in the US and Japan - more than previously expected - as it battles to reverse falling same-store sales.
A $810.2m one-off charge relating mainly to the store closures and the cost of withdrawing from three foreign markets pushed the company well into the red for the fourth quarter of 2002.
The net loss was $343.8m, or 27 cents per share - much bigger than McDonald's guidance last month of a 5-6 cents loss - against a profit of $271.9m, or 21 cents, a year earlier.
Before exceptional charges, McDonald's made a net profit of 25 cents a share.
McDonald's is suffering from a price war in a stagnant US eating-out market, while still attempting to recover from customer complaints about falling standards of food and service.
The fourth-quarter results underlined the task faced by Jim Cantalupo, who took over from Jack Greenberg as chief executive at the start of the year, in turning round the sales performance.
Analysts welcomed Mr Cantalupo's adjustment of McDonald's growth targets, however, towards a pledge to seek "reasonable growth that creates shareholder value".
"Considering the size and nature of our business, a 10-15 per cent earnings per share growth target is not realistic," he said.
Investors and analysts had reacted badly to a conference call last week, when Mr Cantalupo said McDonald's was still a "growth" company, and should not be considered merely a "cash cow".
Some analysts have called for it to slow expansion of the McDonald's brand, and use its cashflow to fund expansion of new formats, such as its investments in Chipotle Mexican Grill and the Pret A Manger sandwich chain.
McDonald's reiterated its commitment to its controversial "dollar menu" - a range of items for $1 each that has stoked the US price war.
But it said it would examine what products should be on the menu - particularly the Big 'N Tasty burger, similar to rival Burger King's Whopper. It admitted sales of its "signature" Big Mac and Quarter Pounder burgers had been hit as customers traded down to the cut-price menu.
Systemwide sales, including company-owned and franchised stores, rose 4 per cent to $10.5bn. Company revenues, including sales from company-owned restaurants and royalties from franchisees, rose 3 per cent to $3.9bn.
But comparable sales, excluding new outlets, were down 1.4 per cent in the US, 1.9 per cent in Europe, and 6.1 per cent in Asia, Pacific, the Middle East and Africa. Only Latin America posted positive comparable growth of 11.2 per cent.
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