McDonald's says January restaurant sales will fall

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January 24, 2013 4:35 AM EST

McDonald's Corp on Wednesday forecast a decline in global restaurant sales for January, as it and other fast-food chains fight for customers who are spending cautiously during continued economic uncertainty.

The world's biggest restaurant company by revenue also reported an unexpected rise in December sales at established U.S. restaurants, which helped lift its fourth-quarter profit above analysts' estimates.

Wall Street expected the early part of 2013 to be tough for McDonald's as it runs short of quick fixes for its business in the United States and bumps up against strong year-earlier results that were bolstered by unseasonably warm weather.

McDonald's forecast for a decline in this month's global same-restaurant sales suggests a "pretty clear drop off between December (2012) and January (2013)," Morningstar analyst R.J. Hottovy said.

Global same-restaurant sales were flat in December, helped by an unexpected 0.9 percent rise in the United States - its second-largest market for revenue just behind Europe.

The company's push to keep more restaurants open on Christmas Day and its shift of the limited-time offering of its popular McRib sandwich to December from October bolstered the December U.S. results. Analysts polled by Consensus Metrix had expected those sales to drop 1.78 percent.

McDonald's expects near-term top and bottom-line growth to remain pressured in part because the company must top strong results from a year ago, Chief Executive Don Thompson said on a conference call with analysts.

Last year's global sales at McDonald's restaurants open at least 13 months increased 6.7 percent for January and 7.3 percent for the first quarter.

Fast-food chains like Burger King Worldwide Inc and Yum Brands Inc's Taco Bell have introduced new U.S. menus and are doing a better job of competing with McDonald's.

At the same time, U.S. consumers have less money in their pockets since the end of the payroll tax cut.

"We suspect choppy demand trends and the impact of the loss of the payroll tax deduction (in the United States) are in part to blame" for the company's downbeat guidance, Lazard Capital Markets analyst Matthew DiFrisco said in a client note.

Fourth-quarter net income at the world's biggest restaurant chain rose 1.4 percent to $1.40 billion, or $1.38 per share. That topped analysts' average forecast of $1.33 a share, according to Thomson Reuters I/B/E/S.

Total sales rose 1.9 percent to $6.95 billion.

In a bid to remain competitive, McDonald's doubled down on promoting its value menus - such as the U.S. Dollar Menu. That effort has pressured profitability, raising concern among analysts.

Shares in the company shares were up 0.1 percent to $92.82 in early trading on the New York Stock Exchange.

(Reporting By Lisa Baertlein in Los Angeles and Brad Dorfman in Chicago; Editing by Maureen Bavdek and Andrew Hay)

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