McDonald's Seeing Some Slowing Growth (MCD)

McDonald’s Corp. (NYSE: MCD) is trading lower after the fast food giant posted some mixed same store sales data for the month of May.  The golden arches posted +5.1% same store sales, above the estimates north of 4%.  But the issue is in the domestic same- store sales that came in at +2.8%, as we were looking for same store-sales growth of 3% to 4% in the U.S. for May.

Europeans can’t get enough of America it seems.  Those same store sales rose by 7.6% from strength in England, France, Germany, and Russia.  Same store sales for Asia Pacific, the Middle-East and Africa rose 6.4%.

So far we are seeing shares trade down about 2.5% at $58.40 in pre-market trading.  The 52-week range is $45.79 to $67.00.

These numbers are not atrocious at all.  Growth of any sort in this environment is something which over 50% of all retail and casual dining franchises would be happy to live with.  Convincing investors that slowing growth is good is another matter entirely.  The only issue is that the street has become used to stellar numbers for about two years out of McDonald’s and that is actually a transition that has been seen over a 4-year or 5-year period.

Jon C. Ogg
June 8, 2009