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Published: November 11, 2009
McDonalds Corp. (NYSE: MCD) became the latest
in a long line of U.S. companies to find growth overseas as
domestic growth continues to falter.
Although there are some signs show the United States is headed
toward a recovery, rising unemployment is weighing on consumers,
who continue to cut back on discretionary spending.
The fast-food giant said its same-store sales in the United
States dipped slightly in October, falling -0.1%. But overseas
was a different story for McDonald’s. Same-store sales in Europe
grew +6.4% and sales in the Asia/Pacific region, the Middle East
and Africa collectively grew +4.7%.
“We’re encouraged by continued strength in the international
business, which more than offset the anticipated domestic
softness,” David Tarantino, an analyst with Robert W. Baird &
Co. Inc., wrote in a note obtained by Bloomberg News. Tarantino
rates McDonald’s shares “outperform.”
Other global companies have seen similar results:
- The Coca-Cola Co. (NYSE: KO): The soft drink maker in the
third quarter saw its year-over-year volume in North America
drop -4%, but said its “Open Happiness” ad campaign is going over
well internationally. Unit case volume for Coke products in
Mexico grew +8%, +6% in Italy, +3% in China and +27% in India.
- General Motors Corp. (NYSE: GRM): The automaker’s sales in
China continued to flourish last month as the government kept
its stimulus policy in place. While GM did show domestic growth
of +4.7% in October compared to a year ago, it more than doubled
its October 2008 sales in China, with 166,911 cars sold in what
is now the world’s biggest auto market.
- Yum! Brands Inc. (NYSE: YUM): The owner of the Pizza Hut, Taco
Bell and Kentucky Fried Chicken brands saw flat same-store sales
in the third quarter for China, and a -5% drop here in the United
States. However, its overall revenue in China grew +11% thanks to
torrid expansion -- it opened 88 locations there just in that
quarter alone. Yum’s international sales excluding China gained
+4%.
- The Dow Chemical Co. (NYSE: DOW): Although the chemical maker
suffered steep volume declines in most territories, its Asia
Pacific region was the lone bright spot, growing +2%, compared to
-13% drops in North America and Europe. The bleeding was minor in
areas that included emerging markets, with a -1% drop in Latin
America, India, the Middle East and Africa.
Billions of dollars in stimulus money are still playing a big
role in emerging markets such as China, where aggressive cuts on
sales taxes on small automobiles have helped. The United Kingdom
last week approved an extra $41 billion in stimulus.
In the United States, a 10.2% unemployment level and waning
consumer confidence could force Washington to consider a second
stimulus.
“The unemployment rate of 10.2% is problematic because it gives
a sense of urgency to Washington, D.C. Washington will be
looking for any increase in stimulus,” Tom Sowanick,
co-president and chief investment officer at OmniVest Group LLC
told Reuters.-- Bob Blandeburgo
Associate Editor
Money
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