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Retailers, consumers and prices

Check Out Line: Weak euro to take bite out of McDonald’s too

June 8, 2010

mcd1Check out the weak euro’s latest victim.

McDonald’s reported better-than-expected global sales in May at stores open at least 13 months, but warned that full-year profits would be hit by unfavorable currency exchange rates, specifically calling out the euro.

 The No. 1 hamburger chain gets about one quarter of its operating income from the euro zone, and that region will result in foreign exchange rates hurting the full-year profit instead of being slightly positive as it previously forecast. However, the company said that issue would not affect second-quarter results and the European stores posted far stronger-than-expected May sales, so the real impact of the weak euro is still to come.

It’s been a mixed bag of late for McDonald’s, which recently recalled at least 13.4 million “Shrek”-themed drinking glasses in the United States and Canada due to the presence of toxic metal cadmium in the designs.

Euro worries don’t just apply to McDonald’s. Rival Burger King on Monday warned that unfavorable exchange rates, primarily related to the euro, would reduce the profit in the current quarter by 1 to 2 cents a share.

The euro hovered near a four-year low against the dollar on concerns over a widening European debt crisis that has struck financial markets.

Also in the basket:

Dollar General earnings top Street view, shares up

Talbots weak quarterly outlook takes shares down

Neiman Marcus profit reflects better luxury spending

Casey’s seeks rejection of Couche-Tard bid

(Reuters photo)

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