Rising sales turn around McDonald's 4Q red ink

January 16, 2004|By BLOOMBERG NEWS

CHICAGO - McDonald's Corp., the world's largest restaurant chain, said it had fourth-quarter net income of about 10 cents a share, helped by rising U.S. sales in response to new products like white-meat Chicken McNuggets.

The earnings include costs of 25 cents a share for the sale of the Donatos Pizzeria chain and closing Boston Market restaurants outside the United States, the company said. McDonald's had a loss of $343.8 million, or 27 cents a share, in the fourth quarter of 2002.

Sales in the United States, McDonald's largest market, rose 12 percent last month, the ninth straight monthly gain. Since Chief Executive Officer James R. Cantalupo came out of retirement a year ago, he has improved food quality, added new salads and cut waiting times. He introduced white-meat Chicken McNuggets in November, two months after the "I'm lovin' it" marketing campaign began.

"Cantalupo has done a great job in implementing some of the proposals he has talked about," said James McGlynn, who helps manage about $6 billion, including McDonald's shares, at Summit Investment Partners in Cincinnati.

Shares of McDonald's rose 8 cents yesterday to close at $25.15 on the New York Stock Exchange. Excluding the expense, the company had a profit of 35 cents a share in the fourth quarter, matching analysts' estimates. The company is to report full results Jan. 26.

Global sales at McDonald's restaurants open at least 13 months climbed 7.3 percent last month. Comparable sales in Europe rose 2.3 percent, the third consecutive monthly increase. Comparable sales in the Asia, Pacific, Middle East and Africa regions rose 1.9 percent in December.

McDonald's said last month that it was selling its 182 Donatos back to the chain's founder and scaling back other ventures to focus on improving sales at the company's main brand.

Cantalupo halted an expansion strategy begun by predecessor Jack Greenberg that franchisees said hurt sales at existing restaurants by shifting McDonald's focus away from quality control.

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