McDonald’s Corp. announces flat quarterly profit, forecasts slow sales growth

McDonalds Corp. announced that its fourth-quarter profit was nearly flat, thanks to the fact that its global same-restaurant sales creep down and expenses of the company rose.

Don Thompson, who is the Chief Executive Officer of the company, said that 2013 was “a challenging year” for McDonalds and explained that the difficulties remain. That is exactly why the company also forecasts a “relatively flat” same-restaurant sales for January 2014. Mr. Thompson said in a news release cited by the Wall Street Journal: “While near-term challenges remain, we are intent on strengthening our brand to further differentiate McDonalds and become even bigger part of our customers lives.”

Mr. Thomson told the companys investors on a conference call, which is also cited by the Wall Street Journal: “The key is going to really be to re-establish the trust of customers. That means basic execution at a restaurant level, marketing engagement at a much stronger level and also to make sure that our menu is relevant.”

The company has suffered some difficulties of external and internal character, which have weakened its business, for over a year. The chain has also made some mistakes in its attitude towards the uncertainty of the market, such as higher prices than its competitors ones.

The current Chief Executive Officer of McDonalds also explained that there was a “bifurcation” of customers. According to him, some lower-income customers are struggling to afford restaurant meals, while those with higher income are willing to spend more money on food. Mr. Thompson shared his beliefs that McDonalds must continue trying to find exactly the right balance between these two types of customers in order to gain success.

The company, however, reported flat sales and earnings for the fourth quarter of 2013. Its same-store sales fell 0.1%, which marked their second quarterly decline in 2013. The profit reported by McDonalds amounts to 1.397 billion dollars, which is a bit higher than the chains profit in 2012, estimated to 1.396 billion dollars. The Per-share earnings of the company increased to 1.30, and its revenue marked a 2%-increase to 7.09 billion dollars.

According to CNN Money, the current share price of McDonalds Corp. is 0.21% down, and its one-year return rate is 2.22% down. The 25 analysts offering 12-month price forecasts for McDonalds Corp. have a median target of 104.00, with a high estimate of 115.00 and a low estimate of 91.00. the median estimate represents a +9.61% increase from the last price of 94.88.