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McDonald’s May Sales Rise 4.8% on New Frappes, Wraps

McDonald's sales at restaurants open at least 13 months increased as diners purchased new beverages. Photographer: Daniel Acker/Bloomberg
McDonald's sales at restaurants open at least 13 months increased as diners purchased new beverages. Photographer: Daniel Acker/Bloomberg

June 8 (Bloomberg) -- McDonald’s Corp.’s global sales rose more than analysts estimated last month as diners purchased new beverages such as frappes.

Sales at restaurants open at least 13 months increased 4.8 percent, the world’s largest restaurant company said today in a statement. Analysts projected global sales would advance 4.5 percent, the median of four estimates compiled by Bloomberg.

McDonald’s, based in Oak Brook, Illinois, introduced foods and beverages to increase sales outside lunch and dinnertime, including a breakfast dollar menu, snack wraps and smoothies. Revenue grew less than some analysts predicted in the U.S., while a new McWrap in Germany and rising demand in Russia fueled European sales.

“McDonald’s is trying to capture as much business as possible in as many hours of the day as possible,” Mark Kalinowski, an analyst with New York-based Janney Montgomery Scott LLC, said in a telephone interview. “If you look across the world in developed markets, McDonald’s is grabbing market share, and it’s coming from times of day where McDonald’s has been less used to getting business.”

Kalinowski recommends buying the shares.

Currency Effect

The company said it expects foreign exchange rates to have a negative effect on profit for the full year, in part because of the weakening euro. Previously, Chief Financial Officer Peter Bensen said he anticipated exchange rates would add to earnings. He spoke on an April 21 first-quarter earnings call.

McDonald’s rose $1.63, or 2.4 percent, to $68.38 at 4 p.m. in New York Stock Exchange composite trading. The stock has increased 9.5 percent this year.

Demand also rose in China, Australia, the U.K. and France, the company said.

Revenue at older restaurants advanced 3.4 percent in the U.S. Analysts predicted a gain of 3.8 percent, the median of estimates from Oppenheimer & Co., Robert W. Baird, Jefferies & Co. and Telsey Advisory Group. Same-store sales rose 5.7 percent in Europe and 3.8 percent in Asia, the Middle East and Africa. Analysts predicted increases of 3.8 percent and 4 percent, respectively.

In a separate statement, the company said it will offer a refund of $3 to any customer who bought a “Shrek Forever After” glass. McDonald’s recalled the products, promoting the new “Shrek” movie, on June 4 after learning the designs on the glasses contained trace amounts of cadmium. The chemical may cause lung disease, according to the website of the Agency for Toxic Substances and Disease Registry.

To contact the reporter responsible for this story: Burt Helm in New York at bhelm3@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

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