The Exchange

McDonald’s Comp Sales Rebound, Led by America’s Support

The Exchange

McDonald's (MCD) same-store sales rebounded to a positive number in November, as all three of its main regions, led by the U.S., showed growth in the important metric that had disappointed investors the previous month.

Shares of McDonald's were up 1% to $89.38 in early trading Monday after the Oak Brook, Ill., hamburger giant said same-store sales in the latest month rose 2.4% globally and were better than analysts had been expecting. In domestic stores, comp sales were up 2.5%, while Europe's sales rose 1.4%. Sales in the Asia/Pacific, Middle East and Africa region were also higher but had the lightest increase at 0.6%.

In October, same-store sales were down by more than 2% in all three areas, which produced a total decline of 1.8% and gave McDonald's its first negative monthly reading in nearly a decade. While the bounceback clearly is better than another downward month, a little perspective is helpful: Of the 11 months reported so far this year, November ranks eighth in terms of comp growth, and the trend lines below indicate how uneven it's been.

As for this particular month, going back five years, the only slower period was 2009, which was, like this year, up against a strong previous showing. In the prior four Novembers, same-store sales were higher by 7.4%, 4.8%, 0.7% and 7.7%. Comp sales cover all McDonald's restaurants, both company-operated and those run by franchisees, that have been open for at least 13 months. The chart below provides the trend for 2012 in the company's biggest regions:

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McDonald's Regions Same-Store Sales

Systemwide sales for November gained 3.2%, or 4.8% if currency rates were held constant.

McDonald's was reporting strong comps in the first quarter, and its shares hit an all-time high above $102 in January, but the months since have been rockier for Ronald & Co. (McDonald's comp sales exclude the effects of foreign currency translation and are a function of restaurant traffic and the size of the average bill.) Sales nearly went negative in July, but settled just on the unchanged mark before finally going under it in October.

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McDonald's Total Same-Store Sales

In a press release, the company said one of the factors in November's numbers was the limited-edition Cheddar Bacon Onion sandwiches. With those, McDonald's lets customers choose between chicken and beef as the main topping.

McDonald's stock generally has been a poor performer this year, including a run as one of the worst members of the 30-stock Dow Jones Industrial Average. On Friday, however, it got an upgrade from Janney Montgomery Scott, which had just downgraded the shares in September. The average price target on McDonald's is above $96, according to FactSet data.

The next big news for McDonald's is only days away, with the return of the McRib.

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