By Julie Jargon and Allison Prang 

McDonald's Corp.'s turnaround continued in the first quarter, beating revenue and profit expectations and posting an 11th consecutive quarter of same-store sales growth.

The burger giant's shares rose 3.6% in premarket trading to $164 each.

Globally, it was McDonald's fifth consecutive quarter of positive guest counts. However, there are signs the chain's sales momentum in the U.S. is slowing. Although 2.9% same-store sales growth in its biggest market beat expectations, that growth was driven by menu price increases and higher-priced menu items, not by more customer visits.

That was also slower than the 4.5% same-store sales growth in the fourth quarter, which some analysts attribute to cold weather that kept many customers at home. Some analysts have questioned how well the chain's new value menu of $1, $2 and $3 items is selling.

RBC Capital Markets called the blow to sales from the new value menu "disappointing."

Global comparable sales rose 5.5%, ahead of a 3.8% that analysts polled by Consensus Metrix had forecast, and global comparable guest counts rose 0.8%.

Revenue fell 9.5% to $5.14 billion, more than the $4.98 billion analysts polled by Thomson Reuters had expected, as McDonald's sold more restaurants to franchisees. On a constant-currency basis, revenue fell 15%, McDonald's said.

McDonald's reported a profit of $1.38 billion, or $1.72 a share, during the quarter, up 13% from a year ago. Omitting a $52 million expense from the new tax law, which impacted earnings by 7 cents a share, the company said it made $1.79 a share. McDonald's said foreign-currency translation also boosted its earnings by 8 cents a share.

Analysts were expecting a profit of $1.67 a share.

McDonald's has tried to entice customers by switching to fresh beef in its quarter-pounder burgers, which it aims to offer in all contiguous U.S. stores by May. It also plans to make its Happy Meals "more balanced" nutritionally by 2022. By the end of that year, the company wants at least half of its kids' meals to have 600 calories or less.

Write to Julie Jargon at julie.jargon@wsj.com and Allison Prang at allison.prang@wsj.com

 

(END) Dow Jones Newswires

April 30, 2018 10:21 ET (14:21 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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