051217 McDonald's Nov Same-Store Sales Up 4 %

Los Angeles, CA - McDonald's Corp. said sales at its hamburger restaurants open at least 13 months rose 4 percent in November as breakfast sales and extended hours in the United States helped offset weaker- than- expected results in Europe.

The results exceeded four Wall Street analysts' estimates calling for an overall rise of between 3.4 percent and 3.7 percent, according to research reports.

In the company's flagship U.S. business, same-store sales rose 4.8 percent. Analysts had been expecting a rise of 3.3 percent to 5.5 percent.

European same-store sales were about flat, although analysts had forecast a rise of 2 percent to 4 percent for the company's No. 2 market. Performance in large markets such as Britain and Germany suffered from tough comparisons to a year earlier because of national coupon promotions in those countries in November 2004.

Prudential analyst Larry Miller said sales of new deli sandwiches in the United Kingdom were below expectations and that poor weather in France and Germany had also hampered results in those markets.

McDonald's has been working to revitalize sales in Europe, where the company's nearly three-year-old turnaround has been slower to take hold. Sales have rebounded in that market in recent months, logging same-store sales increases for five straight months before coming in flat in November.

But Banc of America Securities analyst Andrew Barish said McDonald's European business was still strong.

"We believe improving ... sales in Europe and eventual margin improvement to be an important catalyst for earnings growth in 2006," Barish said in a note to clients.

Same-store sales for Asia, the Middle East and Africa were up 7.1 percent in November, driven by strong results in Australia, Japan and Taiwan.

McDonald's expects to record charges of 2 cents a share in the fourth quarter, primarily for asset impairment in South Korea.

Also, at current average foreign currency exchange rates, fourth-quarter earnings will be reduced by at least a penny a share, the company said. A stronger dollar lessens the value of sales overseas when they are translated into dollars on a U.S. company's income statement.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com