McDonald's misses, 'challenged' by Europe, Asia

McDonald's misses, 'challenged' by Europe, Asia

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Light sales in Europe and Asia dragged on McDonald's (MCD) earnings in the second quarter, the fast food giant reported on Monday, as the company fell short of Wall Street's expectations despite new menu items and higher U.S. sales.

The Oak Brook, Illinois-based burger behemoth posted earnings excluding items of $1.38 per share, up from $1.32 a share in the year-earlier period. Revenue increased to $7.08 billion from $6.92 billion a year ago.

Yet those results were not in line with analysts' estimates, which had expected the company to report earnings excluding items of $1.40 a share on $7.10 billion in revenue, according to a consensus estimate from Thomson Reuters.

Domestic and total global sales rose by a percent, yet those gains were offset by relatively flat performance in Europe and Asia, Middle East and Africa.

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"While our consolidated results this quarter were positive, global comparable sales for July are expected to be relatively flat," said CEO Don Thompson in a statement. "Based on recent sales trends, our results for the remainder of the year are expected to remain challenged."

Market watchers said McDonald's disappointing performance was reflective of the overall food industry, which is struggling to post growth while offering healthier menu fare.

"The industry is still struggling. The market in total is probably growing at a very, very low single-digit rate, if at all," said Peter Saleh, director and senior research analyst at Telsey Advisory Group.

"For Europe, France and Germany have been week for McDonald's for probably a year now," he added.

After the earnings announcement, the company's shares dropped by more than two percent in pre-market trading. (Click here to get the latest quotes for McDonald's: MCD)

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