McDonald's Misses Sales Estimates In Asia

With McDonald's planning to add around 250 new restaurants in China in 2012, there is a certain amount of cannibalization expected that is negatively impacting upon the comp sales growth. On the other hand, we expect the dollar value of sales and profitability to be higher due to the addition of new restaurants. Despite the rather tepid comp sales figures, the company has managed a 8.5% jump in system-wide sales for the APMEA region in 2012, so far.

China's growth has slowed down recently and the Chinese central bank responded by cutting interest rates on June 7. Often, there is a lag between the interest rate cut and its repercussions, so it might take some time before the effect of increased liquidity reflects on McDonald's numbers.

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