McD's flat Dec. sales, dip in traffic raise recession fears

Nation's Restaurant News,  Feb 4, 2008  

Tags: Digital Equipment Corp., sales

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OAK BROOK, ILL. -- McDonald's Corp.'s disclosure last week of flat December same-store sales ended its string of positive monthly sales reports and caused Wall Street analysts to warn that the worst may still be coming for restaurant chains girding for a feared U.S. recession.

For November the bellwether chain posted a U.S. same-store sales gain of 4.4 percent over the same month of 2006. But McDonald's said December was beset by "softer consumer spending."

With the chain's menu prices up 3.5 percent for the month versus a year earlier, its U.S. same-store traffic turned negative, securities analyst John Ivankoe of JP Morgan said. That slippage led analysts to speculate that softer results would soon come from Starbucks Corp., whose latest quarterly results were being reported after press time last week.

As McDonald's share price was falling by as much as 8 percent in midday trading last Monday, its senior executives were acknowledging that the company was not recession-proof, though they said it is recession-resistant and would weather any continuing economic downturn. Chief executive Jim Skinner forecast a 1.5-percent rise in U.S. same-store sales for January. The company reported net income of $1.27 billion, or $1.06 a share, on revenues of $5.75 billion for the quarter ended Dec. 31. The chain's global same-store sales rose 6.7 percent for the full quarter as U.S. same-store sales increased 3.3 percent.

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