McDonald's profit down 30% on sales slump
2014-10-22 11:36:42
Fast food behemoth McDonald’s is struggling to remain relevant.
It reported a larger-than-expected drop in profits Tuesday morning. Net income for the third quarter fell 30% to $1.07 billion ($1.09 per share) from $1.52 billion ($1.52 per share) a year ago.
“McDonald’s third quarter results reflect a significant decline versus a year ago, with our business and financial performance pressured by a variety of factors – from a higher effective tax rate, to unusual events in the operating environments in APMEA and Europe, to under-performance in the U.S., our largest geographic segment,” said McDonald’s President and Chief Executive Officer Don Thompson.
The restaurant chain has struggled to maintain its relevancy with millennials, a key consumer group, in the face of competition from fast-casual chains like Chipotle, which continues to report explosive growth. It’s also still reeling from a supplier scandal in China involving expired meat.
Recent initiatives to bolster sales include an aggressive push into breakfast, plus beefed up customer service during busy hours.
Overall, revenue was down 5% to $6.9 billion, and global comparable sales decreased by 3.3%.
The stock was down 2% to $89.60 in pre-market trading, and is up just 0.2% year-to-date but pays a 3.7% dividend yield.