Franchises: McDonald's Sales Figure Rises 2.6 Percent in Jan.

Date AddedApril 01, 2010 07:39:27 AM

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February 12, 2010 by Jim Coen

McDonald's Inc., the world's largest fast-food chain, said Tuesday a key sales comparison rose 2.6 percent in January, as strong overseas sales more than offset a decline in the U.S.

McDonald's has generally fared well in the recession as customers turned to it for cheap meals, but it has started to feel the pinch more acutely in recent months as consumers have contended with unemployment that's still high.

It has still outperformed most of its competitors, who've increasingly been pushing value menus and discounts of their own.

Sales in stores open at least 13 months fell 0.7 percent in the U.S. and rose 4.3 percent in Europe, Asia/Pacific, Middle East and Africa.

The figure is considered a key indicator of a restaurant chain's health because it excludes the effects of new restaurants and restaurant closings.

Total sales rose 9.1 percent, including an 0.1 percent decline in the U.S. - which makes up about 35 percent of total sales - a 6.7 percent rise in Europe and a 7.2 percent increase in the rest of the world.

"The U.S. continues to be impacted by unemployment and aggressive discounting across the industry, but the results outside the U.S. were encouraging," Morningstar analyst R.J. Hottovy said.

McDonald's said in the U.S its breakfast Dollar Menu and portable Mac Snack Wrap were popular offerings and its free Wi-Fi - which the company introduced in January - was also a draw.

The Wi-Fi offering "sits hand in hand with the McCafe launch," said Hottovy. "They're trying to extend duration of consumers visits."

In Europe, sales were stronger in France and the U.K. and weaker in Germany. Elsewhere in the world, Japan and Australia sales were strong. China was weaker because of the timing of the Chinese New Year.

Bernstein analyst Sara H. Senatore said European results were better than expected.

"Strong demand in France and the U.K. is consistent with macro trends; confidence, personal income and gross domestic profit all improved in the U.K, while sentiment and retail sales in France are encouraging," she wrote in a note to investors.

McDonald's, based in Oak Brook, Ill., also said it will take a $40 million to $50 million tax charge in the first half related to closing 430 restaurants in Japan.

Shares rose 65 cents, or 1 percent, to close at $63.57