McDonald’s Says Quarterly Profit Rose on Hearty U.S. Sales, Tax Gain
McDonald’s Corp. said Wednesday that first-quarter profit rose, exceeding analysts’ estimates, helped by U.S. sales and a tax gain.
In a preliminary earnings statement, the world’s largest restaurant chain said net income was 56 cents a share, up from 40 cents in the same period a year earlier. Sales at restaurants open at least a year rose 6.8% in March and 4.6% in the period.
Sales in the U.S. climbed 5.2% in the quarter as free samples lured customers to restaurants. In Europe, discount coupons and the addition of 1-euro menu items spurred a rebound in revenue.
McDonald’s, based in Oak Brook, Ill., had a $179-million tax benefit in the quarter and costs of $57 million to expense stock options.
“They’ve continued to deliver,” said Peter Goldman, who helps manage $900 million, including 330,000 McDonald’s shares, at Chicago Asset Management in Chicago. “They’re following a strong year-earlier quarter so there’s nothing wrong with putting a 6%-plus gain on top of that.”
McDonald’s earned 43 cents a share, a penny more than analysts’ estimates, excluding the tax gain of 13 cents, according to Thomson First Call.
Shares of McDonald’s, which has more than 31,500 restaurants in 119 countries, rose 32 cents to $31.22 on the New York Stock Exchange. The shares have dropped 2.6% this year after gaining 29% in 2004. The company plans to report final quarterly results April 21.
March sales in Europe climbed 6.6%, the most since February 2004. For the quarter, revenue increased 2.9%, down from a 3.5% gain a year earlier.
Since taking over in November, Chief Executive Jim Skinner, 60, has continued his predecessors’ strategy of trying to drive revenue with higher-price items that appeal to health-conscious consumers.
The addition of new items such as meal-sized salads and McGriddle breakfast sandwiches has led to U.S. sales gains for two years in a row.
Skinner took over from Charlie Bell, who resigned to fight colorectal cancer. Bell died Jan. 16 at age 44. He became CEO in April after James Cantalupo’s death from a heart attack.
