McDonald's Corp, the world's largest restaurant chain, said the cost of closing 175 stores in 10 countries and falling sales in the US and Europe will reduce earnings this year. The company's shares fell 7.9 percent.
McDonald's also will exit three Middle Eastern and Latin American nations and eliminate as many as 600 jobs, including up to 250 in the US. The moves will cost US$350 million to US$425 million before taxes in the current quarter, the company said in a statement.
McDonald's, which didn't give a specific forecast, had predicted annual earnings of US$1.31 a share.
This is the second time in eight weeks that Chief Executive Jack Greenberg brought down profit estimates. Some investors question whether Greenberg, a 20-year McDonald's veteran who took charge in 1998, can retain customers amid complaints about the service and the food.
"Is four years long enough?" said James McGlynn of Summit Investment Partners, whose US$5 billion in assets includes about 140,000 shares. "They are not moving in the right direction."
McDonald's shares fell US$1.52 to US$17.79 at 4:17pm in New York Stock Exchange composite trading, making the stock the biggest decliner among the 30 members of the Dow Jones Industrial Average. The shares had fallen 27 percent this year, compared with a 14 percent drop in the Dow.
Outside director Andrew McKenna, in a statement released by the company, said Greenberg has the "full support" of McDonald's board.
Oak Brook, Illinois-based McDonald's, with more than 30,000 restaurants in 121 countries, earned US$1.64 billion, or US$1.25 a share, on revenue of US$14.9 billion last year.
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