Bad news for Yum? McDonald’s China sales fall

McDonald’s announced that its sales at stores open at least a year in the Asia, the Middle East and Africa region declined 1.7% in May, with particular weakness  in Japan and China.

In fact, sales in China declined for the first time since November 2009, said Lynne Collier, analyst at Sterne Agee. Collier said that her conversations with McDonald’s management suggested that the lower comparable sales in China last month is “not a one-off”, but rather the start of a new trend.

McDonald’s (MCD) stock slipped more than 0.7%. It was the biggest laggard on the Dow.

Related: U.S. companies betting big in China

Shares of fellow fast food giant Yum! Brands (YUM), which now generates more of its revenue in China than the United States thanks to the growing popularity of KFC there, took an even bigger hit. Shares fell 3.2%, making it one of the worst performers in the S&P 500.

Yum! Brands has been under pressure for weeks amid growing fears that a slowdown in the world’s second largest economy could have a big impact on the company.  Shares sank more than 5% last Friday following news that Chinese manufacturing declined in May for the seventh straight month. The stock is down almost 12% in the past month.

In its latest effort to spur growth, China’s central bank cut the country’s deposit and lending interest rates on Thursday.

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