030322 McDonald's Posts 12th Straight Sales Drop

Chicago - McDonald's Corp. reported its 12th consecutive monthly decline in comparable sales, pressured by a U.S. hamburger price war, poor winter weather and a weak global economy.

The world's largest restaurant company, in the midst of a U.S. discounting battle with rival Burger King Corp., said worldwide February sales at restaurants open at least 13 months fell 4.7%, in line with Wall Street expectations. In the year-ago period, so-called same-store sales rose 0.4%.

Oak Brook, Illinois-based McDonald's reported its first-ever quarterly loss in January. It has been grappling with a slowdown in the U.S. fast-food sector, changing consumer tastes and perceptions of poor service in its restaurants.

"They need to focus on the basics; they have to get off discounting," said U.S. Bancorp Piper Jaffray analyst Allan Hickok. "It only results in lost sales. It's not helpful and the franchisees don't like it."

In October, McDonald's returned to price discounting with a Dollar Menu, offering a variety of items, including its Big N' Tasty hamburger. The menu has been blamed for eroding profits.

The company's February same-store sales in the United States, its largest market, declined a greater-than-expected 4.4%, while those in Europe, another major market, fell 3.9% before adjusting for currency exchange translations, above analysts' forecasts.

McDonald's shares closed down 9 cents to $12.38 in Wednesday trading on the New York Stock Exchange.

In a regulatory filing, McDonald's said its financial "outlook remains cautious until we see improved performance in our major markets."

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