McDonald’s (NYSE:MCD) Unfortunate August Sales Take a Hit

The month of August stormed down on McDonald (NYSE:MCD) with bad news, one after the other. Restaurant closings in Russia, and the food safely scandal in China led to decline in sales throughout China and Japan. If you think that this wasnt bad enough the cut back came from the U.S customers at a very bad time. For about a year now they have been limiting their intake of cheeseburgers and fries and it just seems that things couldn’t get any worse.

All this resulted in a global decline of 3.7% this August which was much deeper than the expected 3.1% using the Consensus Matrix analysis. Wall Street was warned beforehand as well that McDonald’s (NYSE:MCD) gross profit was likely to take a blow from the current events. Putting on a brave face McDonald’s (NYSE:MCD) CEO, Don Thompson, tried to say the situation was out of their hands but they were trying to steer through the storm as best as they could.

The latest figures state a 2.8% fall in MCD (NYSE:MCD) same restaurant sales revenue for restaurants opened for 13 months or more throughout the US. The Wall Street prediction of a much lesser decline was 2%. This is a cause for concern as this US SRS revenue is one-third for MCD (NYSE:MCD) around the globe.

The continuing breakfast competition, consumers seeking cheaper options and an operational mess on their hands has kept dinners heading the other way in great numbers. Getting restless, McDonald’s (NYSE:MCD) took drastic measures and replacing its head of the US and Canada division who hadn’t even completed two years.

2013 bought in decline of sales in the same store restaurants spread thru out the US, in such a big dollar amount that it succeeded in breaking its record for 10 straight years of gains.

The Asian market after the food safety scandal outburst in July had its aftermath continuing for months. Sales in China were ofcourse affected but they even fell in Japan by a staggering 25%. This ordeal started when Shanghai TV channel broadcasted McDonald’s (NYSE:MCD) largest meat supplier in China was relabeling expired meat and selling it to MCD (NYSE:MCD), YUM (NYSE:YUM) and KFC. After this outburst McDonald (NYSE:MCD) was short on meat for three consecutive weeks.

McDonald (NYSE:MCD) predicted that this problem would result in a decline of 15 to 20 cents (per share) in its third quarter profit. The company also said that it was putting in extra time and effort to regain the trust of its customers. On the other side of the globe, the recent conflict between Russia and Ukraine, led MCD (NYSE:MCD) to close down of a few its restaurants. However Europe is still considered a bright spot due to British consumption.

There was still a great lack of consumer sentiment in Europe, which is the major reason for the decline in sales and profit for three running quarters and this is expected to continue in September as well. Now it’s for us to see and up to McDonald’s (NYSE:MCD) to effectively manage the situation and change strategies where needed.