McDonald's to post first quarterly loss in its 47-year history

CHICAGO (AP) _ McDonald's Corp., struggling through a year of sluggish sales at home and abroad, said Tuesday it expects to report the first-ever quarterly loss in its 47-year history. <br><br>The

Tuesday, December 17th 2002, 12:00 am

By: News On 6

CHICAGO (AP) _ McDonald's Corp., struggling through a year of sluggish sales at home and abroad, said Tuesday it expects to report the first-ever quarterly loss in its 47-year history.

The announcement of the expected loss for the fourth quarter sent shares in the world's largest restaurant company down $1.64, or nearly 10 percent, to $15.74 in afternoon trading on the New York Stock Exchange. The price dipped below the seven-year low of $15.75 reached earlier this fall.

McDonald's said it expects to incur after-tax charges of at least $390 million in the fourth quarter to pay for the restructuring moves it announced last month, including closing underperforming restaurants and pulling out of several countries. That will result in a loss of 5 cents to 6 cents per share.

Excluding the charges, the Oak Brook-based chain expects earnings to be 25 cents to 26 cents per share _ well short of the 31-cent estimate of Wall Street analysts surveyed by Thomson First Call.

The announcement comes in the wake of a CEO change at McDonald's and an apparently failed effort to jump-start sales by launching a price war with Burger King.

McDonald's said sales at U.S. restaurants open at least a year were 1.3 percent lower in the first two months of the fourth quarter than in the period a year earlier, and down 1.5 percent for the first 11 months of the year.

Sales at established McDonald's restaurants worldwide were down 1.6 percent for the quarter _ including 1.6 percent in Europe, 5.2 percent for its Asia-Pacific-Middle East region and 2.5 percent in Canada _ and down 2 percent for the first 11 months.

The company also said profit margins for the fourth quarter will be lower than a year ago.

Jim Cantalupo, who had retired earlier this year as McDonald's president, was rehired Dec. 5 to take over as chairman and chief executive officer from Jack Greenberg as of Dec. 31. Greenberg, under fire for months as McDonald's slumped and its stock sank to seven-year lows, retired unexpectedly.

``This has been a difficult year and our financial performance has been below expectations,'' said Matthew Paull, McDonald's chief financial officer. ``Under the leadership of Jim Cantalupo, I am confident we will improve our business.''

The company did not conduct its usual conference call to discuss the fourth-quarter outlook. It said Cantalupo is ``aggressively reviewing all aspects of the business'' and will discuss his priorities in January.