McDonald's axes 350 stores as sales slump continues worldwide

The closures included 220 restaurants in the U.S. and in China, as well as 130 closures by McDonald’s Japan.

Based in Illinois, the company said same-store sales fell 2.3 percent in the first quarter ended March 31, as the company’s two-year sales slump continued. Sales will also be negative again this month.

In the U.S., lower gas prices and higher employment did not help. Same-store sales fell 2.6 percent in the first quarter.

The company continued to blame competitive activity, as other quick-service and fast-casual chains have eaten into McDonald’s immense market share over the past 18 months, said NRN.

“As the world’s leading restaurant company, we are evolving to be more responsive to today’s customer,” McDonald’s new British CEO Steve Easterbrook said in a statement. “McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth.”

He said the company intends to share the initial details of this plan on May 4.

Total revenue for the quarter fell 11 percent, or 1 percent excluding the impact of currency translation, to $5.9 billion, from $6.7 billion the previous year. Net income was $811.5 million, or 84 cents per share, a 33-percent decrease from $1.2 billion, or $1.21 per share the previous year. Without currency translation, net income fell 26 percent.

Operating income fell 28 percent, to $1.4 billion. The results included a $195 million charge related to the restaurant closings and other management actions.

In the U.S., operating income fell 11 percent due to the weak sales results, as well as restructuring and closing charges.

Same-store sales fell 0.6 percent in Europe. Strong performance in Britain was offset by continued weak results in France and Russia.

Same-store sales fell 8.3 percent in Asia Pacific Middle East Africa, or APMEA. The results included persistently weak results in Japan.Results in China, while still negative, were said to be improving. Still, APMEA operating income fell 80 percent.

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“We are committed to positioning the company for long-term growth,” CFO Kevin Ozan said in a statement. “We took a meaningful step in the first quarter with the decision to close underperforming restaurants that are not contributing to our profitability. While we continue our efforts to regain our business momentum and improve sales at our more than 36,000 restaurants around the world, our current performance reflects the ongoing pressures on the business.”