McDonald's Profit Plunges 30 Percent as Traffic Continues to Fall The fast-food giant is struggling to retain customers domestically and abroad.
By Katie Little
This story originally appeared on CNBC
As fast-food giant McDonald's struggles to retain customers domestically and abroad, it reported its worst monthly comparable sales decreases in the U.S. and Europe since early 2003, according to a new note from Janney Montgomery Scott.
"Holy moly!" Janney analyst Mark Kalinowski said in a phone interview. "This one is certainly not going to be talked about for decades to come in a positive way."
During September, comps dived 4.1 percent in the U.S., 4.2 percent in Europe and 7.5 percent in the fast food company's Asia Pacific Middle East Africa unit.
In the third quarter, global comparable sales dived 3.3 percent.The fast food giant was expected to see its global same store sales shrink by 3 percent with U.S. sales falling by 2.9 percent and those in the Asian Pacific Middle East Africa unit dropping by 10.6 percent, according to a forecast from Consensus Metrix.
To spark a turnaround it its U.S. unit, McDonald's has been ramping up its transparency efforts and highlighting its food quality. Abroad, McDonald's sales have seen an impact after a scandal involving one of its suppliers in China, which it has since suspended.
Related: Yum, McDonalds face food safety scandal in China
McDonald's on Tuesday reported net income that dropped 30 percent and revenue that missed analysts' expectations as the Dow component battled declining traffic in all major segments.
After the earnings announcement, the company's shares were lower in late morning trading.
Net income during the third quarter fell 30 percent to $1.07 billion or $1.09 per share from $1.52 billion or $1.52 a share in the year-earlier period.
Revenue fell to $6.99 billion from $7.32 billion a year ago.
"I think they're still losing share," said Telsey Advisory Group senior analyst Peter Saleh, adding that millennial diners are part of the problem for McDonald's.
"They're moving toward higher quality, naturally raised food, and McDonald's just isn't resonating with that younger crowd," Saleh added.
Analysts had expected McDonald's to deliver earnings of $1.37 per share on $7.18 billion in revenue, according to Thomson Reuters.
"McDonald's third quarter results reflect a significant decline versus a year ago, with our business and financial performance pressured by a variety of factors—from a higher effective tax rate, to unusual events in the operating environments in APMEA and Europe, to under-performance in the U.S., our largest geographic segment," McDonald's President and Chief Executive Officer Don Thompson said in a statement.
