McDonald’s Scrapes a Win Despite Rising Input Costs
McDonald’s (NYSE:MCD) reported first-quarter profits up 7 percent from the previous year despite turmoil in its European markets and rising input prices. Earnings were in line with analysts’ expectations.
Profit was $1.27 billion ($1.23 a share) for the January-March quarter, compared to $1.21 billion ($1.15 a share) in the year-ago period. Global sales were up 7.3 percent at restaurants that were open 13 months or longer. Regionally, U.S. sales climbed 8.9 percent; sales in the Asia-Pacific, Middle East and Africa were up 5.5 percent, while sales in Europe climbed 5 percent.
Sales were strong due to the company’s strategy in recent years of rolling out high-profit, all-day menu items such as coffee frappes and fruit smoothies, which are priced low enough to make them affordable as simple treats. New products — such as oatmeal and Chicken McBites — also pushed up sales in the U.S. this quarter, with same-store sales rising 8.9 percent, helped in part also by renovated restaurants and warmer weather.
The chain faced rising input costs and had to increase prices 3 percent last year.