McDonald's Foresees Q1 Sales and Margin Squeeze

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McDonald's Foresees Q1 Sales and Margin Squeeze

03/09/2009
OAK BROOK, Ill. -- McDonald's Corp., the nation's No. 1 hamburger chain, cautioned Monday the stronger dollar and commodity costs will likely squeeze its first-quarter revenue results and margins, The Associated Press reported.

The fast-food chain anticipates quarterly sales to be off by at least $600 million and earnings to be hurt by 7 to 9 cents per share if foreign-currency rates stay at current levels. The results are also expected to include a 3- to 4 cent-per-share gain from McDonald's sale of its minority stake in Redbox Automated Retail LLC.

While cautious on the first quarter, McDonald's Chief Executive Officer Jim Skinner said he's still confident in the company's fundamental strength. "We have the right strategies in place to grow the business for the long-term and we have the operating experience to manage through the current environment," Skinner said in a statement.

McDonald's managed solid same-store sales results for February, with U.S. sales up partly on its chicken offerings and core menu items, according to the AP.

U.S. same-store sales increased 2.8 percent. Same-store sales -- or sales at stores open at least a year -- are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones, the report stated.

Aside from the boost provided by its chicken offerings, McDonald's said core items like the Quarter Pounder and beverages and breakfast products helped lift February results.