BofA Just Reacted To McDonald's Sales Decline (And Made A Special Note On China)

In a new note, Joseph Buckley of Bank of America commented on McDonald's Corporation MCD's January global same-store sales decline of 1.8 percent, and said it was in-line with expectations.

Within the Americas, Buckley notes that the 0.4 percent comp gain was an improvement over last January 2014's weather-impacted 3.3 percent decline but fell short of the 1.0 percent expected. The analyst also notes that industry data showed McDonald's under-performing the QSR sandwich category (ex-McDonald's) by 250 basis points.

This is a wide margin and shows a loss of market share but it is also the narrowest McDonald's gap to the QSR sandwich competitive set since April.

The United Kingdom continues to be strong while Germany was positive for the second consecutive month due to promotional activities. France experienced soft sales since a tax increase in September while Russian sales continue to be threatened by a weakened economy.

Asia Pacific, Middle East and Africa (APMEA) same store sales showed a 12.6 percent decline, faring better than the 15 percent to 20 percent decline Buckley expected. McDonald's Japan had already disclosed that its January same-store sales were down 39 percent and this market accounts for most of the region's sales decline.

Excluding Japan, APMEA comps were slightly negative.

A Special Note On China

China's same-store sales were impacted by the New Year shift from January 30 to February 19.

According to Buckley, the numbers were "surprisingly" lower by only a single-digit percentage on a year over year basis. By contrast, the analyst notes that last week, Yum! Brands, Inc. YUM said its China comps in the first quarter (January and February) would be down a mid-teen percentage point.

McDonald's shares are Buy-rated at Bank of America with a $101 price target.

Image credit: Giorgio Mardoni, Wikimedia