McDonald’s Corporation’s (MCD) comparable sales are on the rise. After climbing 2.6% in January 2010, comparable sales rose 4.8% in February, led by sales growth in Europe and Asia-Pacific, Middle East and Africa (APMEA) segments.
However, sales in the U.S. remain weak amid heavy job losses, economic conditions, and the discount war amongst fast-food chains to lure budget-constrained consumers.
The company, which faces stiff competition from Burger King Holdings Inc. (BKC), Wendy’s/Arby’s Group Inc. (WEN) and Yum! Brands Inc. (YUM) said that the U.S. comparable sales inched up 0.6% in February (versus a 2.8% increase last year for the comparable month) helped by a strong demand for the Olympic-themed Chicken McNugget, $1 breakfast value menu and McCafe beverages.
In Europe, comparable sales climbed 5.4% in February (versus a 0.2% decline last year for the comparable month) fueled by strong performance in the U.K., France and other markets. Sustained focus on core and seasonal value menu offerings contributed to sales.
Comparable sales in APMEA soared 10.5% in February (versus a 0.7% rise last year for the comparable month) buoyed by a robust performance in Japan, China and Australia. The Chinese New Year helped lift sales in APMEA.
McDonald’s, the world’s largest hamburger chain, said system-wide sales at worldwide restaurants surged 11.2% in February. However, in constant currencies, the rate of increase in system-wide sales softened to 6.4%.
We think McDonald’s provides relative safety for the investor, with moderate growth prospects, being exposed to faster-growing international markets. However, the economic headwind, which has affected consumers’ disposable income, is impeding growth. McDonald’s currently operates more than 32,000 restaurants.
“MCD” Free Stock Analysis: Buy? Sell? Hold?
“BKC” Free Stock Analysis: Buy? Sell? Hold?
“WEN” Free Stock Analysis: Buy? Sell? Hold?
“YUM” Free Stock Analysis: Buy? Sell? Hold?
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