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31/01/03 . n/a . Business - AP . USA
Business - APMcDonald's Stock Hits Eight-Year Low
Business - AP McDonald's Stock Hits Eight-Year Low Fri Jan 31, 6:11 PM ET Add Business - AP to My Yahoo! OAK BROOK, Ill. - McDonald's Corp.'s stock sank to an eight-year low Friday after a leading credit agency cut its debt ratings, saying its efforts to turn around its sagging U.S. business won't pay off before 2004.
Fitch Ratings cited McDonald's "weakened operating performance" and increased competition from other low-cost eateries in downgrading its debt by one notch and revising its overall rating outlook to negative from stable.
McDonald's shares fell 22 cents, or 1.5 percent, to close at $14.24 on the New York Stock Exchange (news - web sites) — their lowest closing price since December 1994 — after sinking as low as $13.91.
New York-based Fitch said it acted because "the measures being taken by McDonald's to improve its U.S. business results, such as store remodels, quality improvement and the Dollar Menu, will take 12 to 18 months to have an impact on operating performance."
It also indicated that sluggishness in the fast-food industry in the United States and soft global economies will continue to hamper sales.
On the bright side, it noted that McDonald's continues as the fast-food industry leader worldwide and boasts "exceptional brand awareness, extensive real estate holdings and broad geographic diversity."
The downgrade came eight days after the Oak Brook, Ill.-based company posted a first-ever loss of $344 million in the fourth quarter, acknowledging complications from its fast expansion pace and complaints about speed and food quality in its U.S. restaurants.
The world's leading hamburger chain announced plans to close 719 of its 31,000 restaurants worldwide, and new CEO Jim Cantalupo has pledged other changes in the weeks and months ahead.