McDonalds Corp, the worlds biggest restaurant chain, stated smaller-than-anticipated drop in same-store US sales and said it would open less restaurants amid falling earnings.
Sales at locations open at least 13 months slid 0.9% during the quarter ended December 31, including a 1.7% drop in comparable sales in the US.
On average analysts had projected an overall sales fall of 1.5% and a decline of 2.1% in the companys domestic market, according to researcher Consensus Metrix.
Net income for the three months stood at $1.1 billion, 21% down compared to the $1.4 billion reported during the same period of last year. Earnings per share were $1.13 versus $1.40 a year earlier.
Revenue decreased with 7.3% to $6.57 billion. According to estimates complied by Thomson Reuters, analysts had projected per-share earnings of $1.22 combined with a revenue of $6.68 billion.
“2014 was a challenging year for McDonalds around the world. Our results declined as unforeseen events and weak operating performance pressured results in each of our geographic segments,” said Chief Executive Officer Don Thompson.
However, US comparable sales edged up 0.4% during December, marking their first increase since October 2013 and rewarding the companys efforts to spur demand for its hamburgers.
McDonalds has turned some attention to its US restaurants lately. The food chain has accelerated its service by reducing products included in a menu, while also providing larger ingredient diversity for customers to choose from.
The company still faces severe competition from the fast-casual segment, including Five Guys and Chick-fil-A among others, that has grown rapidly and threatens the likes of KFC, McDonalds and Burger King.
McDonalds international sales were hit by a number of non-competition factors. Asian consumers shifted away from the companys burgers after a supplier of McDonalds was found to be selling tainted meat.
Then the company ran out of potatoes in its Venezuela operations. Meanwhile, Russian officials launched a wave of health inspections at its restaurants, which resulted in several store closures. The move was widely seen as a countermeasure against the US-imposed sanctions, after Russias interference in Ukraine.
“We are accelerating our efforts behind solutions that capitalize on the investments were making in our technology and our restaurants to bring McDonalds Experience of the Future to life for our customers and deliver on our commitment to drive sustained, profitable growth for all stakeholders,” said Mr. Thompson.
McDonalds gained 0.61% on Thursday and closed at $90.89 in New York. On Friday the stock fell 0.35% to trade at $90.57 at 15:40 GMT, marking a one-year decrease of 4.66%. The company is valued at $88.45 billion.
According to the Financial Times, the 20 analysts offering 12-month price targets for McDonalds have a median target of $96.00, with a high estimate of $110.00 and a low estimate of $88.00. The median estimate represents a 5.62% increase from the last close price.
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