More Evidence of Peaking Growth at McDonald's As Asia Drags (MCD, ARCO)

Retail

Published: June 8, 2012 8:48 am

Last Updated: April 28, 2020 1:55 am

Is this just the fight on fat slowing growth, or is this the peaking of a secular trend? McDonald’s Corp. (NYSE: MCD) reported that its same-store sales rose by only 3.3% in the month of May as China and Japan acted as drag.

We highlighted the recent woes facing this food giant and others like its Arcos Dorados Holdings Inc. (NYSE: ARCO) with aggressive growth plans in BRIC and emerging nations. The company is saying that the economic pressure is capping its growth currently. The hamburger giant said that its Asia-Pacific, Middle East and Africa region saw a drop of -1.7% from a year ago.

U.S. same-store sales managed to turn in 4.4% growth and Europe managed to turn in growth of 2.9% despite the ongoing woes there. While sales grew here, the company needs to closely pay attention to the beginning of fat-fighting as you have seen from Bloomberg in New York and Walt Disney’s anti-obesity trends coming down the pipe.

Today’s news is dragging sales down 2.9% to $85.95 against a 52-week trading range of $80.28 to $102.22. McDonald’s is just a defensive stock that is not acting too defensive right now. Sadly, one more round or two bad news could put the stock within striking distance of a 52-week low. This was the best performing DJIA stock in 2011. What a difference a year can make.

JON C. OGG

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