McDonald’s Profit Up 4.2%; Expansion Plans to Shrink

McDonald’s Corp. on Thursday reported a 4.2% increase in second-quarter profit, slightly less than expected and said it was scaling back expansion plans for its struggling U.S. business.

The world’s largest fast-food company posted net income of $438.2 million, or 63 cents a share, compared with $420.4 million, or 59 cents a share, in the year-ago period. Analysts had expected earnings of 64 cents a share.

Revenue rose 6.3% to $2.83 billion, from $2.67 billion.

Shares of Oak Brook, Ill.-based McDonald’s rose 31 cents to close at $50.25 on the New York Stock Exchange.

McDonald’s said it plans to open 2,400 restaurants this year, with just 20% of them in the United States. The company previously said it would open 2,400 to 2,800 stores, about 30% in the U.S.

In disclosing its more modest plans, the company acknowledged the difficulties of trying to squeeze more growth out of the mature U.S. market merely by adding stores.

McDonald’s Chairman and Chief Executive Michael Quinlan said the company refined its plans after “input from local management.”

At a Glance:

Sears, Roebuck & Co. reported that its second-quarter profit fell 57%, weighed down by charges to settle complaints from bankrupt customers that it failed to get court approval for repayment agreements. Net income for the three months ended June 30 fell to $117 million, or 29 cents a share, from $274 million, or 67 cents, in the year-ago period.

The No. 2 retailer said its most recent quarter was hurt by its agreement in June to pay $320 million to settle claims that the company improperly collected money from customers whose debts were erased in bankruptcy filings.

McDonnell Douglas Corp. said second-quarter earnings increased 3.7% as a favorable resolution of state tax issues offset costs related to its pending merger with Boeing Co. The company reported net earnings of $195 million, or 93 cents a share, compared with $188 million, or 87 cents, a year ago.

Sprint Corp.’s second-quarter profit fell 15% to $269 million, or 62 cents a share, from $317 million, or 73 cents, in the year-earlier period.

Occidental Petroleum Corp. reported second-quarter net income of $158 million, or 41 cents per share, compared with net income of $181 million, or 49 cents, in the year-ago quarter.

Salomon Inc., the world’s biggest bond trader, said second-quarter profit fell 26% to $220 million, or $1.89 share, from $298 million, or $2.65, in the year-earlier period.

Alex. Brown Inc. said its second-quarter earnings dropped 36% to $31.7 million, or $1.23 a share, down from $49.8 million, or $2.01, a year ago.

Bankers Trust New York Corp.’s second-quarter earnings rose 20% to $181 million, or $2.07 a share, from $151 million, or $1.67, a year ago.

Coca-Cola Co.’s second-quarter earnings rose 12% to $1.17 billion, or 47 cents a share, before a gain and a charge, from $1.05 billion, or 42 cents, in the year-earlier period.

Hasbro Inc. said second-quarter earnings more than doubled to $13 million, or 10 cents a share, from $5.99 million, or 5 cents, a year earlier.

Sun Microsystems Inc. reported fiscal fourth-quarter net income of $237.2 million, or 61 cents per share, compared with $122.3 million, or 31 cents, a year ago.

Transamerica Corp.’s second-quarter earnings rose 14.4% to $108.9 million, or $1.65 a share, from $95.2 million, or $1.36 a share, a year earlier.

Bausch & Lomb Inc. said second-quarter earnings fell 33% to $20.3 million, or 36 cents a share, down from $30.3 million, or 54 cents, a year ago.

Sybase Inc. reported second-quarter net income of $4.4 million, or 6 cents per share, compared with a net loss of $24.6 million, or 33 cents, in the year-earlier quarter.

Office Depot Inc. reported second-quarter net income of $30.5 million, or 19 cents per share, which included a charge for its failed merger with Staples Inc. That compared with $28.2 million, or 18 cents, a year ago.

Polaroid Corp.’s second-quarter profit rose 33% to $34.5 million, or 76 cents a share, up from $26 million, or 57 cents, a year ago.

Reebok International Ltd. said second-quarter earnings rose 2.6% to $20.3 million, or 35 cents a share, from $19.8 million, or 27 cents, a year ago.

B.F. Goodrich Co.’s earnings rose 4.3% to $31.4 million, or 58 cents a share, from $30.1 million, or 56 cents, a year earlier.

Owens Corning said second-quarter profit fell 9% to $63 million, or $1.17 a share, from $69 million, or $1.25, a year earlier.

Gillette Co. reported second-quarter net income of $319 million, or 57 cents per share, compared with $277 million, or 50 cents, a year ago.

Cirrus Logic Inc. reported fiscal first-quarter net income of $2.5 million, or 4 cents a share, compared with a loss of $7.6 million, or 12 cents, in the year-ago period.

Hambrecht & Quist Group said fiscal third-quarter net income fell 47% to $10.2 million, or 40 cents a share, from $19.4 million, or 94 cents, in the year-earlier period when it was a private company.

Rubbermaid Inc. said its second-quarter profit fell 16% to $37.6 million, or 25 cents a share, from $44.8 million, or 30 cents, in the year-earlier quarter.

Case Corp. said second-quarter earnings rose 25% to $138 million, or $1.82 a share, from $110 million, or $1.47, in the year-earlier period.

BankBoston Corp. said second-quarter earnings rose 13% to $212 million, or $1.37 a share, from $188 million, or $1.16, before a gain a year earlier.