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McDonald's posts first-ever loss
©Associated Press OAK BROOK, Ill. -- McDonald's Corp. announced the first quarterly net loss in its history Thursday, a $343.8-million deficit reflecting an assortment of charges and write-offs aimed at helping it pull out of an unprecedented slump. While McDonald's had warned of the loss last month, it took an unexpectedly high $810-million in charges for the fourth quarter. That news helped push its stock, which traded above $30 a share as recently as last summer, to new eight-year lows. "We know we need to make changes," new chief executive Jim Cantalupo said on a conference call, pledging to reveal more comprehensive turnaround plans by the end of March. "I think you're going to see a lot of changes at McDonald's in the weeks and months ahead." The burger giant said it is closing 719 under-performing restaurants -- primarily in the United States and Japan -- including 202 that were shuttered in the fourth quarter. But it is not giving up on expansion, disclosing plans to open another 850 traditional McDonald's restaurants, 380 of its smaller "satellite" facilities in airports and other locations, and 150 of its other brand restaurants in 2003. Factoring in planned closings and openings, the company said the total of traditional McDonald's to be opened this year will be down about 40 percent from the 773 net additions of 2002. Total charges for the quarter included $267-million for restructuring items, $359-million for restaurant closings and the reduced value of those assets and $184-million on technology write-offs. The net loss amounted to 27 cents a share, versus a profit of $271.9-million, or 21 cents a share, a year earlier. The stock fell 36 cents, or 2.3 percent, to $15 in trading on the New York Stock Exchange after dipping as low as $14.65. Revenues were $3.9-billion, up 3 percent from $3.77-billion. But sales at restaurants open at least a year -- a key indicator of success -- were down slightly in both the United States and Europe, its top two markets. McDonald's, which was founded in 1955 and has been publicly traded since 1965, has been struggling due to growing consumer weariness with fast food, a crowded restaurant market and its own problems with speed and service. It replaced Jack Greenberg with Cantalupo as chief executive last month after its stock fell to seven-year lows. Cantalupo said his first priority is to fix McDonald's existing business, although he hasn't abandoned the commitment to growth. "Considering the size and nature of our business, a 10 to 15 percent earnings per share growth target is not realistic," he said. "We will seek reasonable growth that creates shareholder value." Cantalupo, who returned to McDonald's from retirement to take the top job, earlier this week said the company was abandoning a $1-billion technology project and closing more restaurants than previously planned. As of Dec. 31, McDonald's operated 31,108 restaurants in 119 countries, including 13,491 in the United States, 6,070 in Europe and 3,891 in Japan. Of that total, 1,083 involve its partner brands: Boston Market, Chipotle, Donatos, Fazoli's and Aroma Cafe.
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From the Times Business report
From the AP
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