For Immediate Release
Chicago, IL – May 12, 2010 – Zacks.com Analyst Blog features: McDonald’s (MCD), Burger King Holdings Inc. (BKC), Yum! Brands Inc. (YUM), Moody’s (MCO) and BJ’s Wholesale Club Inc. (BJ).
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Here are highlights from Tuesday’s Analyst Blog:
McDonald’s Sales on the Rise
McDonald’s Corporation’s (MCD) comparable sales are on the rise. Although diners are now becoming more comfortable spending as the economy eases, but are still seeking value menu offerings. The fast food restaurant operator has witnessed an uptrend across its domestic and international markets.
Global comparable-store sales climbed 4.9% in April 2010 compared to an increase of 6.9% in the same month last year. McDonald’s opined that system-wide sales at worldwide restaurants surged 10.3% in the month under review. However, in constant currencies, the rate of increase in system-wide sales softened to 6.4%.
The world’s largest hamburger chain, McDonald’s, said that the new menu offerings, which include value-based drinks, frappes, Chicken McNuggets and the McCafe premium coffee line-up, have helped boost the U.S. comparable-store sales. The company also began offering its Breakfast Dollar Menu to boost sales, as heavy job losses have taken their toll on restaurant traffic in the mornings.
McDonald’s, which faces stiff competition from Burger King Holdings Inc. (BKC) and Yum! Brands Inc. (YUM) said that the U.S. comparable sales grew 3.8% in April (versus a 6.1% increase last year for the comparable month).
In Europe, comparable sales climbed 5.3% in April (versus an 8.4% increase last year for the comparable month) fueled by strong performance in the U.K., France, Germany and Russia. Sustained focus on core value menu offerings, and restaurant re-imaging program continued to drive gains.
Moody’s to Face SEC Probe
Credit rating agencies are facing constructive criticism from the U.S. Securities and Exchange Commission (SEC). Recently, Moody’s Corp. (MCO) has been in the news for providing inaccurate information to the market regulator, the SEC, three years ago.
This news was disclosed by the rating agency last Friday, which exposed it to another controversy. The company has faced a series of allegations in 2009, and this trend doesn’t seem to be going away. According to the SEC, the rating agency misled them with some faulty information while applying for its license in 2007.
Not only this, but in 2008 the company acknowledged a computing error which translated into a faulty rating of the 11 fixed income investments having a total value of around $1.0 billion. The company disclosed that it has already responded to the SEC’s allegation and admitted that there were some errors in its license application procedure.
Other than Moody’s Investor Service, rating agencies such as Fitch, Standard & Poor’s Rating Services, and A.M. Best have recently come up against some strong criticism. This led to the Rating Accountability and Transparency Enhancement Act (RATE) of 2009. As per the new bill, the Securities and Exchange Commission (SEC) will be empowered to monitor the functioning of the rating agencies. Both retail and institutional investors will also have the option of conducting legal proceedings against them in case of improper updating of facts.
BJ’s Wholesale Sales Increase
BJ’s Wholesale Club Inc. (BJ), a leading warehouse club operator in the United States, recently posted sales results for the four-week period ended May 1, 2010.
The net sales for April 2010 jumped 9.5% to $787 million from $718.7 million in the same month last year.
Comparable club sales for April rose 4.6%, including a positive impact of 3.8% from gasoline sales. Excluding gasoline sales, merchandise comparable club sales grew marginally by 0.8%.
BJ’s hinted that merchandise comparable club sales were hurt approximately by 2.5% due to a shift in pre-Easter sales previously.
During the month under review, the company experienced a 3% rise in sales of food, whereas sales of general merchandise dropped by nearly 3%.
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