McDonald's (MCD) Global Comps Fell 2.5% in July; APMEA Down 7.3%

McDonald's (NYSE: MCD) announced that global comparable sales decreased 2.5% in July. Performance by segment was as follows:

• U.S. down 3.2%
• Europe up 0.5%
• Asia/Pacific, Middle East and Africa (APMEA) down 7.3%

"McDonald's global growth priorities - providing our customers with their favorite food and drinks, creating memorable experiences, offering unparalleled convenience and becoming an even more trusted brand - are the foundation of our customer-centric approach to building our business for the long term," said McDonald's President and Chief Executive Officer Don Thompson. "Although July's results were not in-line with McDonald's expectations, we intend to strengthen our performance by addressing the current business headwinds with the discipline and conviction that inspire our customers' trust and loyalty."

In July, U.S. comparable sales decreased 3.2% amid continuing broad-based challenges. During the month, the U.S. featured core favorites in conjunction with McDonald's global World Cup sponsorship and promoted premium beef and chicken options as the segment lapped a prior year Monopoly event. McDonald's U.S. remains focused on enhancing its customer relevance and appeal through service, value and menu initiatives.

Europe's comparable sales rose 0.5% in July led by positive performance in France and the U.K., partly offset by negative performance in Germany and Russia. McDonald's Europe is taking a holistic approach to building customer demand with a combination of compelling limited-time menu choices and expansion of the breakfast daypart and blended-ice beverages.

In July, APMEA's comparable sales decreased 7.3% reflecting the impact of food quality and safety issues at a supplier to McDonald's and other food companies in China. As a consequence, results in China, Japan and certain other markets experienced a significant negative impact. The affected markets represent approximately 10% of global systemwide sales and negatively impacted the segment's July comparable sales by over 700 basis points. Going forward, McDonald's is undertaking recovery strategies to restore customers' trust and confidence.

In the Form 8-K dated July 22, 2014, the Company indicated that full year 2014 global comparable sales were expected to be relatively similar to year-to-date June performance (i.e. relatively flat) given a stagnant IEO category, sustained competitive activity, consumer price sensitivity and cost pressures. However, as a result of the China supplier issue, the Company's global comparable sales forecast for 2014 is now at risk.

Systemwide sales for the month decreased 0.5%, or 0.0% in constant currencies.

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