McDonald’s Sales Fall for the First Time in 9 Years (Along with the Stocks)

By Sung Hwan Hong

McDonald’s Corporation (NYSE:MCD), world’s leading fast food retailer, has announced that its global comparable sales have decreased 1.8% in October. In a recent press release, the corporation disclosed 2.2% decrease in US and Europe, and 2.4% in Asia Pacific, Middle East and Africa. It is the first time in 9 years that McDonald’s comparison sales have declined.

On Nov. 8, the day of the press release, McDonald’s stock prices fell 1.3%, and 2% the following day to $85.11.

An average consumer at McDonald’s

In a 2012 Investor Conference Call in October 19, Don Thompson, President and CEO of McDonald’s Corporation, detailed the challenges as the corporation begins the fourth quarter.

“We continue to face pressure on both the top and bottom lines some of which is the result of planned strategic decisions,” Thompson said. “But other pressures have been driven by the external environment including declining consumer sentiment, higher commodity and labor cost, and heightened competitive activity.”

However, John Gordon, a contributing columnist at seekingalpha.com, says the reported decline in sales is a fault of erroneous reporting.

“One of the problems is MCD reports by calendar month. But not every month has the same number of weekdays and weekends each year, and MCD missed a Saturday and a Sunday this year,” wrote Gordon, in his recent article, ‘Memo to McDonald’s: Fix the Reporting’.

“Comparing to one prior year is not really the best measurement,” Gordon wrote. “It misses cumulative history.” In his article, he argues that McDonald’s sales were down versus 2011, but still up versus year 2008-2010.

Don Thompson will participate in the Morgan Stanley global Consumer Conference on November 13, to address the investors and tackle the issues in Q4.

McDonald’s Global Comparable Sales Decrease 1.8% in October, Nov. 8, 2012
http://phx.corporate-ir.net/phoenix.zhtml?c=97876&p=irol-newsArticle&ID=1756129&highlight=
John Gordon, Memo to McDonald’s: Fix the Reporting, Nov. 12, 2012
http://seekingalpha.com/article/998951-memo-to-mcdonald-s-fix-the-reporting
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