McDonald's took Wall Street by surprise Monday morning, with a November same-store sales report that beat expectations and showed particular strength in the U.S. business.
The news follows a weak performance in October that had some investors speculating about the future of the world's largest restaurant company.
The Oak Brook-based burger giant reported U.S. same-store sales up 2.5 percent on the strength of its breakfast business, value offerings, beverages and limited-time offers like the cheddar bacon onion sandwich. In Europe, same-store sales grew 1.4 percent, and 0.6 percent in the chain's Asia/Pacific, Middle East and Africa division.
Overall, same-store sales increased 2.4 percent, beating various expectations for a roughly flat performance.
McDonald's has taken a tough stance on slipping U.S. sales as revived rivals like Wendy's and Burger King crank out new premium and value products. Days after releasing a report that showed October's rare drop in monthly same-store sales, McDonald's said its U.S. president, Jan Fields, had resigned and would be replaced by Jeff Stratton, who had been the company's global restaurant officer.
"We are strengthening our focus on the global priorities that are most impactful to our customers — optimizing our menu, modernizing the customer experience and broadening accessibility to our brand to move our business forward," McDonald's CEO Don Thompson said in a statement.
While the sales report is likely to be a boost for the fast-food chain, investors don't expect company performance to return to normal levels until early 2013.
"One month does not a trend make … but it's a nice sign to see them rebound after a horrible October," ITG Investment Research analyst Steve West said.
Analysts expect volatile industry sales in the coming quarters as countries around the world grapple with economic woes and high unemployment. Profits could get squeezed as diners shop around for deals and restaurants respond by keeping prices down.
"We are concerned about the margin outlook in this more promotional environment," said Lazard Capital Markets analyst Matthew DiFrisco.
McDonald's "ramped up its value messaging, focusing heavily on the Dollar Menu to help drive traffic," Jefferies & Co restaurant analyst Andy Barish said in a research note.
The company has been promoting both the Dollar Menu and its Extra Value Menu, which includes offerings like 20 Chicken McNuggets for $4.99, to lure diners.
Baird analyst David Tarantino raised his fourth-quarter earnings estimate by a penny per share Monday morning following the sales announcement. He wrote that while company performance "could remain soft" through the first quarter, "the November sales report supports our thesis that McDonald's can achieve better performance in 2013 as a whole, with results aided by planned initiatives (including increased emphasis on value plus premium offerings across markets), fewer cost pressures, and less negative currency translation."
McDonald's shares closed up 93 cents, or 1 percent, at $89.41.
Reuters contributed.
eyork@tribune.com
Twitter @emilyyork
'Dollar Menu' sparks McDonald's rebound
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'Dollar Menu' sparks McDonald's rebound
