McDonald’s Stock Slips as Same Store Sales Fall More Than Expected

McDonald’s shares slipped in premarket trading Tuesday after it reported higher third-quarter revenue but lower profit than last year, as the fast-food giant’s same-store sales fell more than expected.

The fast-food giant registered $6.87 billion in revenue, up from $6.69 billion last year and the $6.81 billion analysts expected, according to consensus estimates compiled by Visible Alpha. McDonald’s also posted $2.26 billion in net income, down from last year’s $2.32 billion and the $2.30 billion analysts projected.

After stripping out nearly $70 million in charges, McDonald’s adjusted net income of $2.32 billion narrowly beat estimates.

The chain also reported a 1.5% decline in same-store sales, with a small bump to U.S. sales and declines internationally, after reporting a 1% drop in the second quarter, when executives said higher prices were driving lower-income customers away. Analysts expected a decline of about 0.6% in comparable sales, with nearly flat sales in the U.S. and lower sales internationally.

The third quarter also saw McDonald’s announce the extension of its $5 Meal Deal promotion into December rather than its originally planned summer run. The company said last month that the value meal had been successful in driving sales, especially in bringing lower-income consumers back to McDonald’s.

Shares fell about 2% to $291.00 soon after the earnings were released.

Company Doesn’t Mention E. Coli Outbreak

Company leadership didn’t mention last week’s E. coli outbreak in the release, which the Centers for Disease Control and Prevention (CDC) said was linked to McDonald’s Quarter Pounders. Executives will likely be asked about the outbreak on the company’s earnings call, which starts at 8:30 a.m. ET.

Over the weekend, the company said testing had confirmed that its beef patties were not the source of the outbreak, giving it confidence that it could bring the burgers back to the menu across some 900 restaurants in a dozen affected states, without the slivered onions that are believed to be the cause.

The fast-food giant’s stock entered Tuesday little changed this year after news of the E. coli outbreak sent it lower last week.