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McDonald's February same-store sales up 4.8%

McDonald's Corp reported a 4.8% rise in February sales at established restaurants as strong overseas results offset softness in the United States, sending its shares up nearly 2%.

While the weather and high unemployment numbers weighed on the world's biggest hamburger restaurant chain's domestic US markets, Chinese New Year celebrations in many overseas markets boosted sales.

Japan, China and Australia were particularly strong, the company said.

Sales at restaurants open at least 13 months rose 0.6% in the United States, 5.4% in Europe, and 10.5% in the Asia/Pacific, Middle East and Africa (APMEA) region.

McDonald's January same-store sales fell 0.7% in the United States, while those in Europe and in the Asia/Pacific, Middle East and Africa (APMEA) region both rose 4.3%.

While McDonald's was still taking share from its fast-food peers like Burger King, both US and European same-store sales numbers at McDonald's were below Oppenheimer analyst Matthew DiFrisco's expectations.

DiFricso, who rates the stock “peer perform,” said he is worried about the stock's price going forward as McDonald's is showing weakness in the United States and is about to encounter tougher year-over-year comparisons in Europe.

“The valuation reflects that it is a better quick-service restaurant play right now than its peer group, but as far as going higher from here, I would think that they would need to have improving trends rather than sort of flat to decelarating trends,” DiFrisco said.

McDonald's and some other fast-food chains initially benefited when the global economic downturn sent US diners to lower-priced fare.

That so-called trade-down effect is no longer strong enough to offset a spending retreat by young men and minority groups, who account for a large number of fast-food customers and have unemployment rates much higher than the overall US jobless rate.

Earlier this year, the burger chain surprised analysts by announcing a 1% increase in US comparable sales for December after two months of declines.

McDonald's Chief Executive Jim Skinner told Reuters in February that the December increase in US same-store sales was a “sustainable result” in the longer term. (Reuters)