Update: McDonald's July Same-Store Sales Hurt By Meat Scandal

| About: McDonald's Corporation (MCD)


McDonald’s same-store sales for July hurt significantly.

This confirms my previous McDonald’s article that the scandal may be worse than you think.

The hit to sales even in the U.S. was in-line with my expectations.

McDonald's (NYSE:MCD) reported its same-store sales for July which was the worst month in quite a while. Overall same-store sales dropped 2.5%. In the Asia region, same-store sales plunged 7.5%. The U.S. saw a 3.2% decline. CEO Don Thompson stated that the results were "not in-line with McDonald's expectations."

McDonald's blamed "continuing broad-based challenges" as well as having a comparison month versus last year when it had a monopoly event. The monopoly events tend to spark a little extra interest that translates into sales and there was no event for July this year. The weakness in Asia specifically was due to "the impact of food quality and safety issues at a supplier to McDonald's and other food companies in China."

More interesting, to me at least, was that the release went on to say (my emphasis added), "As a consequence, results in China, Japan and certain other markets experienced a significant negative impact." In my last article I stated:

McDonald's has around 2,000 units in China out of more than 35,000 worldwide. That's only 6%, so you might think it's not a big deal, because the other 94% shouldn't be affected. I disagree. McDonald's has already been struggling with domestic same-store sales for several quarters and just reported 1.5% decline this past fiscal and calendar second quarter.

I believe the China scandal left a bad taste in some consumers' mouths over here domestically and now the numbers suggest that's the case. Is it just a coincidence that the worst month in quite some time in the United States occurred at the same time as the scandal that hit not just china but "certain other markets"? Maybe. I suspect we'll know more when the August results surface on September 9.

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