Guest guest Posted January 23, 2003 Report Share Posted January 23, 2003 McDonald's Posts First Quarterly Loss By Deborah Cohen CHICAGO (Reuters) - McDonald's Corp. (MCD.N) posted its first-ever quarterly loss on Thursday as it absorbed the cost of closing hundreds of restaurants, more than previously announced, and declared an end to the era of double-digit profit growth. The world's largest restaurant company posted a wider-than-expected net loss of $343.8 million, or 27 cents a share, in the fourth quarter, compared with a profit of $271.9 million, or 21 cents, in the year-earlier period. The company had predicted a net loss of only 5 cents to 6 cents a share on Dec. 17. Shares of the Oak Brook, Illinois-based hamburger maker, which operates some 30,000 restaurants worldwide, fell 4 percent to their lowest level in eight years. McDonald's has been suffering from slow growth in the United States, its largest market, where it is working to improve customer service and sales. Before special items the company posted earnings of 25 cents a share, in line with its expectations. " Considering the size and nature of our business, a 10-15 percent earnings per share growth target is not realistic, " Jim Cantalupo, the fast-food giant's new chairman and chief executive, said in a statement, pulling back from a growth target set in 2001. System-wide sales, which include McDonald's some 30,000 company-owned and franchised restaurants, rose 2 percent to $10.5 billion. McDonald's said sales at comparable restaurants in the United States and Europe, two of its largest markets, fell in the quarter. McDonald's took charges of $656.9 million after taxes in the fourth quarter. The writedowns mainly cover the cost of exiting three Latin American markets, closing 719 stores, mostly in the United States and Japan, terminating a multi-year project to link technology worldwide, and cutting jobs. CLEARING THE BOARDS " They're throwing in the kitchen sink here, which is not unusual for new management to do, " said Tim Ghriskey, who heads Ghriskey Capital Partners LLC, which owns McDonald's as a core holding. " It really helps clear the boards and provides a very solid operating base going forward. " The number of closings is more than 500 stores higher than previously announced. In December, McDonald's predicted about $435 million in charges and the closure of about 175 stores. In an address to Wall Street last week, Cantalupo and other senior executives said additional restaurants would close, but they declined to provide numbers. The U.S. fast-food market has become increasingly competitive as McDonald's, hamburger rivals Burger King Corp. and Wendy's International Inc. (WEN.N) and Taco Bell parent Yum Brands Inc. (YUM.N) struggle to maintain market share in the face of changing consumer tastes and the emergence of other fast-food providers, such as sandwich chain Panera Bread Co. (PNRA.O). Cantalupo, who took over after McDonald's Chairman and Chief Executive Jack Greenberg retired under pressure at the end of 2002, said last week that McDonald's would stick with its discount " Dollar Menu " but remained open to adjusting it. Introduced late last year, the Dollar Menu has boosted restaurant traffic, but it has been criticized for shrinking profit margins and igniting a costly price war with rival Burger King, the No. 2 U.S. hamburger maker. Shares of McDonald's fell nearly 14 percent in the fourth quarter. By comparison, the Dow Jones Industrial Average, of which McDonald's is a component, rose nearly 5 percent. The fourth-quarter net loss marks the eighth quarter in the past nine in which McDonald's results have fallen short of its year-earlier level. Analysts' estimates of earnings before charges dropped to an average of 25 cents a share from 31 cents after the company warned of the net loss. 01/23/03 12:51 © Copyright The Associated Press. Anna Quote Link to comment Share on other sites More sharing options...
Guest guest Posted January 23, 2003 Report Share Posted January 23, 2003 Don't forget that the last " spat " we had here was sparked by a report about MickeyDs. Dave >>McDonald's Posts First Quarterly Loss By Deborah Cohen CHICAGO (Reuters) - McDonald's Corp. (MCD.N) posted its first-ever quarterly loss on Thursday as it absorbed the cost of closing hundreds of restaurants, more than previously announced, and declared an end to the era...<< -----clipped----- Quote Link to comment Share on other sites More sharing options...
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