Dow component McDonald’s reported net income that dropped 30 percent and revenue that missed analysts’ expectations on Tuesday as the fast-food giant battled declining traffic in all major segments.
After the earnings announcement, the company’s shares fell in pre-market. (Click here to get the latest quotes for the fast food giant.)
Net income during the third quarter fell 30 percent to $1.07 billion or $1.09 per share from $1.52 billion $1.52 a share in the year-earlier period.
Revenue fell to $6.99 billion from $7.32 billion a year ago.
Analysts had expected McDonald’s to deliver earnings of $1.37 per share on $7.18 billion in revenue, according to a consensus estimate from Thomson Reuters.
“McDonald’s third quarter results reflect a significant decline versus a year ago, with our business and financial performance pressured by a variety of factors—from a higher effective tax rate, to unusual events in the operating environments in APMEA and Europe, to under-performance in the U.S., our largest geographic segment,” said McDonald’s President and Chief Executive Officer Don Thompson in the release.
Global comparable sales dived 3.3 percent.The fast food giant was expected to see its global same store sales shrink by 3 percent with U.S. sales falling by 2.9 percent and those in the Asian Pacific Middle East Africa unit dropping by 10.60 percent, according to a forecast from Consensus Metrix.
“I think they’re still losing share,” said Telsey Advisory Group senior analyst Peter Saleh, adding that millennial diners are part of the problem for McDonald’s.
“They’re moving toward higher quality, naturally raised food and McDonald’s just isn’t resonating with that younger crowd,” Saleh added.
To spark a turnaround it its U.S. unit, McDonald’s has been ramping up its transparency efforts and highlighting its food quality. Abroad, McDonald’s sales have seen an impact after a scandal involving one of its suppliers in China, which it has since suspended.