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McDonald's Reports Global Comparable Sales For August

McDonald's Corporation today announced that global comparable sales decreased 3.7% in August.  Performance by segment was as follows:
  • U.S. down 2.8%
  • Europe down  0.7%
  • Asia/Pacific, Middle East and Africa (APMEA) down 14.5%
"During August, McDonald's global business faced several headwinds that impacted sales performance," said McDonald's President and Chief Executive Officer Don Thompson.  "As a System, we are diligently working to effectively navigate the current market conditions to regain momentum.  For the long term, we remain focused on strengthening the key foundational elements of our service, operations and marketing to maximize the impact of our strategic growth priorities for our customers and our business."

In August, U.S. comparable sales decreased 2.8% amid continuing broad-based challenges, including sluggish industry growth in a highly competitive marketplace.  Given the current environment, the U.S. is addressing its service, value and menu opportunities to enhance customer relevance and loyalty.   Soft top-line results are expected to pressure U.S. margin performance in the third quarter.

Europe's comparable sales decreased 0.7% in August reflecting positive performance in the U.K., more than offset by weak performance in Russia.  The month's results were supported by premium beef and chicken offerings, along with the ongoing expansion of breakfast and blended ice beverages.  For the third quarter, weak consumer sentiment is expected to impact restaurant sales and profitability, particularly in certain predominantly company-operated markets.

In August, APMEA's comparable sales decreased 14.5%, largely due to the recent supplier issue in China, which has significantly impacted results in China, Japan and certain other markets.  APMEA is in the process of undertaking recovery strategies in order to restore customers' trust and confidence while continuing to pursue value, convenience and menu initiatives that differentiate the McDonald's experience.

As we continue to assess the impact of the supplier issue in China, we currently estimate that this issue will negatively impact third quarter results by about $0.15 - $0.20 per share in comparison to prior year results.  This is largely due to a combination of lost sales, expenses associated with our recovery efforts and the impact of these items on the third quarter tax rate, which is expected to be above the Company's outlook for the full-year tax rate of 31-33%.  An update on the Company's full-year 2014 financial outlook will be provided in conjunction with McDonald's third quarter earnings release in October.

Systemwide sales for the month decreased 2.9%, or 1.3% in constant currencies.

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