July 23 - The world's biggest restaurant chain is expected to report a slowdown in July sales growth, reflecting the slowing global economy and stronger U.S. dollar. Sasha Salama reports.
TV AND WEB RESTRICTIONS~**NONE*~ PLEASE NOTE: THIS EDIT CONTAINS 4:3 MATERIAL McDonald's is bracing itself to report a sales slowdown in July. That's after the world's biggest hamburger chain surprised Wall Street with weaker than expected second quarter profits. Don Thompson, McDonald's new CEO, said "The environment has become more challenging" reflecting the "slowing global economy and persistent economic headwinds". REPORTER BRIDGE: SASHA SALAMA, REUTERS REPORTER (ENGLISH) SAYING: "One of those headwinds - a stronger U.S. currency. McDonald's says the stronger dollar -- which lessens the value of U.S. companies' overseas sales -- cut 7 cents a share from the bottom line." McDonald's makes more money in Europe than anywhere else. Italy and Spain, where unemployment is soaring, were markets that were especially hard hit. That's simply because more consumers are eating at home, according to Jack Russo of Edward Jones. SOUNDBITE: JACK RUSSO, SENIOR CONSUMER ANALYST, EDWARD JONES, (ENGLISH) SAYING: "Consumers in general are just being pinched, they're being frugal, they're worried about their futures, worried if they have jobs about their job status. If they don't have jobs, clearly that means they have to eat more at home." McDonald's is the latest in a string of multi-nationals to get hurt by slower economies and a weaker dollar. SOUNDBITE: JACK RUSSO, EDWARD JONES, (ENGLISH) SAYING: "Coca-Cola, Philip Morris, also reporting that Europe overall is weaker. But predominantly the big-time pressure is in the Southern portion of Europe - Italy, Spain, Portugal." Analysts say multi-nationals can either sit back and wait for Europe and the U.S. economy to get better. Or they can try to win more business and gain new market share. If they choose the latter, analysts say it should pay off next year when the dollar shouldn't be nearly as big a problem as it's been in 2012. Sasha Salama, Reuters.