NEW YORK (CNN/Money) -
McDonald's Corp. scaled back its third-quarter and full-year profit estimates Tuesday due to weaker-than-expected sales in the United States and in Europe.
The world's largest restaurant chain now expects to report an operating profit of 38 to 39 cents a share in the third quarter, flat with a year ago, and below Wall Street's estimates of 42 cents a share, according to research firm First Call.
McDonald's (MCD: down $1.20 to $20.49, Research, Estimates) said it sees an operating profit of $1.43 a share or better in 2002, above the $1.36 a share it earned a year earlier, but shy of analysts' estimates of $1.49, according to First Call.
The company's warning comes as it looks to turn around slumping sales with a new dollar menu and remodeled stores.
"As part of this plan, we expect to invest $300 million to $400 million in existing U.S. franchised restaurants in 2003," said Jack Greenberg, the company's chairman and CEO. "To fund the additional capital expenditures related to U.S. initiatives, we expect to moderate share repurchases to approximately $500 million in 2003 as well as reduce global new restaurant openings."
The company said U.S. sales were flat in the first two months of the third quarter and it expects sales and operating profit to grow in the low-single digits for the full year.
McDonald's added that European sales increased 4 percent through the first two months of the quarter, but sales in Germany and in the U.K. slowed as "our marketing messages in these countries did not resonate as well with consumer as we had hoped."
The firm sees European sales and operating profit growing in the mid-single digits for the year.
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