McDonald's Reports Steeper Profit Drop

By Chelsey Dulaney 

McDonald's Corp. reported a steeper-than-expected drop in profit in its first quarter amid foreign-currency impacts and restructuring charges, though revenue met Wall Street expectations.

Shares edged up 0.8% in premarket trading.

Sales excluding newly opened or closed stores fell 2.6% in the U.S. division, as new promotions and products couldn't offset competitive pressure. Consensus Metrix had forecast a declines of 2.1%.

The results come as the fast-food chain embarks on a turnaround under new Chief Executive Steve Easterbrook

Mr. Easterbrook took the helm at the fast-food giant in March and has helped instill confidence in investors--with shares up over the past three months.

Mr. Easterbrook's moves so far in the U.S. include a plan to raise wages for McDonald's restaurant workers, an effort to curb antibiotic use in its chicken, testing of all-day sales of breakfast items, and the launch of premium chicken sandwiches and sirloin burgers. The efforts, however, have drawn the ire of some of the franchisees who run the vast majority of McDonald's restaurants and question whether they can afford to implement the plans.

Overall, McDonald's reported a profit of $811.5 million, or 84 cents a share, down from $1.2 billion, or $1.21 a share, a year earlier. The results included 17 cents per share related to write-offs and restructuring and 9 cents a share related to foreign currency.

Revenue fell 11% to $5.96 billion.

Analysts polled by Thomson Reuters had expected earnings of $1.06 a share on revenue of $5.96 billion.

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