McDonald's Corp. (MCD - Analyst Report) reported sluggish comps for the month of November. Comps grew 0.5% year over year in the month of November, same as in October but were lower than comps growth of 2.4% in Nov 2012.
Comps for the segment were down 0.8% compared to an increase of 2.4% in the year- ago month and 0.2% in the previous month. The decline reflects the strike by fast food workers in the U.S., stiff competition and relatively flat industry traffic trends.
Recently, another popular burger maker Burger King Worldwide Inc. , like McDonald's, also introduced new items, which include barbecue rib sandwiches and Big King burgers.
Despite the challenging macroeconomic conditions, the region reported comps growth of 1.9% better than 1.4% in the year-ago month and 0.8% in the previous month. The increase reflects strong performance in the U.K., France and Russia, partially offset by weakness in Germany. Overall results in Europe were supported by the company’s attempts to fulfill demand via innovative value platforms and popular seasonal food events.
Asia/Pacific, Middle East and Africa (APMEA)
APMEA continued to underperform with comps declining 2.3% compared to a 0.6% increase in the year-ago month. However, the decline was lower than 2.8% in October. The significant downside reflects lower sales in Japan. Though the company is continuously working to improve performance of this segment by providing value offerings, accelerating growth in breakfast and leveraging brand extensions, its year to date sales were still down 1.9%.
Despite an array of new menu items and offers, the company’s monthly sales have been tempered due to slack demand and intense competition. During the third quarter of 2013, global comps were up 0.9% versus 1.0% in the second quarter and 1.9% in the year-ago period. October global comps edged up 0.5% year over year, however, they were down compared to August comps of 1.9%.
However, going forward, strong brand recognition and commitment to product innovation, value menu offerings, and extension of its McCafe premium beverage line as well as a variety of core items would help the company to improve sales.
McDonald's presently retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Buffalo Wild Wings Inc. (BWLD - Analyst Report) , and Cracker Barrel Old Country Store, Inc. (CBRL - Snapshot Report) . Both these stocks hold a Zacks Rank #2 (Buy).
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