CHICAGO — McDonald’s Corp. said Tuesday that weaker-than-expected sales in the United States and Europe this summer have prompted it to reduce its estimate of 2002 profits, dropping its stock to a seven-year low.
The hamburger giant also said it will slow the pace of new restaurant openings abroad in connection with a U.S. initiative that entails adding lower-priced items, renovating older restaurants and focusing on improving service.
The announcement underscored McDonald’s continuing struggle with a sales slump at its 13,200 restaurants in the United States, where the proliferation of fast-food and casual-dining competition in recent years has eroded its sales and market share.
The company, based in suburban Oak Brook, said it is cutting its full-year earnings forecast to $1.43 per share or more, citing flat sales in July and August and a more cautious outlook for the fourth quarter. Analysts surveyed by Thomson Financial/First Call had estimated $1.49 per share.
It pegged third-quarter earnings at 38 cents to 39 cents a share, virtually unchanged from the 38-cent figure of a year ago. Wall Street analysts were anticipating 42 cents a share.
McDonald’s shares fell $2.39, or 11 percent, to $19.30 in early afternoon trading on the New York Stock Exchange — the lowest level since October 1995.
McDonald’s hopes to jump-start U.S. sales and its declining stock price with a plan that initially calls for selling two sandwiches — the Big ’N’ Tasty and McChicken — for $1 each next month, followed by an eight-item “dollar menu” in November.
The program also will involve customer service initiatives, particularly during the lunchtime rush, and investments in its restaurant facilities ranging from new signs to improved drive-throughs to complete remodelings.
The company also will reduce its share buyback program to $500 million in 2003, said Jack Greenberg, chairman and chief executive officer.