December 19, 2002 The Advertiser by Dave Carpenter
MCDONALD'S Corporation has warned its protracted sales slump which
has forced a management shakeup and
restaurant closures will result in the first quarterly loss in
its 47-year history.
The announcement sent shares in the burger giant tumbling to a nearly eight-year low. It also confirmed that a price war with rival Burger King in the US - its first big discounting campaign since 1997 - had not paid off the way the company had planned after two years of wrestling with a crowded US restaurant market, the overseas mad-cow disease scares, marketing misfires and mounting service complaints.
McDonald's said it expected to incur after-tax charges of at least $US390 million in the fourth quarter to pay for the restructuring moves it announced last month.
The changes include closing under-performing restaurants and pulling out of several countries.
The moves would result in a net loss of 5c-6c per share.
McDonald's shares, which traded at nearly $US50 three years ago and topped $US30 as recently as June, sank $1.39 - or 8 per cent - to $15.99 in afternoon trading on the New York Stock Exchange.
The price was the lowest closing price, adjusting for a stock split, since January 26, 1995.
The slump goes well beyond McDonald's backyard with sales at established restaurants worldwide down 1.6 per cent for the quarter and down 2 per cent for the first 11 months.