McDonald’s Profit Drops as Sales in U.S. Struggle

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McDonald’s reported Tuesday that it had struggled during its second quarter of 2014 with profit dropping by 1% with sales at same stories falling by 1.5% as customer traffic in the United States failed to increase compared to the same period last year.

The Golden Arches reported sales during the second quarter of $7.2 billion, an improvement of 1% over the same period one year ago, but $100 million short of the estimate of $7.3 billion by Wall Street.

Net income for the burger chain was $1.39 billion, which was down from the $1.4 billion during the same quarter one year ago. Earnings per share were $1.40, which missed the estimate of $1.43 by Wall Street.

In the U.S., sales at same stores were down 1.5%. The decline was attributed by the company from a fall off in traffic amidst other challenges.

Comparable sales in Europe also fell by 1%, while Asia comparable sales were up 1.1%, due in part to strong China sales.

Sales in China could take a hit after a story was run over the weekend on television in China saying McDonald’s used meat from one of its suppliers that had changed the expiration date and meat that had fallen on the floor.

Globally, comparable store sales ended flat in comparison with the same period one year earlier.

Dan Thompson the CEO and president at McDonald’s said his company has much work that needs to be done to reignite the momentum over the upcoming 18 months.

Thompson said company comparable sales globally are likely to be negative for July as well and the 2014 full year comparable sales globally will likely be similar to the year to date performance through June.

After the release of the quarterly earnings, shares at McDonald’s dropped by over 2% in pre-market trades. Since the start of 2014, the stock has increased by just over 1.2%.

Its competitor Chipotle was enjoying a huge boost in trading after hours following its earnings results. The stock was up over 10% in early trading on Tuesday as well.

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