US Markets
Monday, July 29th, 2024 12:57 pm EDT
Key Points
- McDonald’s reported quarterly earnings and revenue below analysts’ expectations, with adjusted earnings per share at $2.97 (vs. $3.07 expected) and revenue at $6.49 billion (vs. $6.61 billion expected), alongside a decrease in net income compared to the previous year.
- The company experienced a 1% decline in same-store sales across all divisions, marking the first drop since Q4 2020, with U.S. same-store sales falling by 0.7% due to reduced consumer spending at fast-food chains.
- McDonald’s is implementing strategies like a $5 meal deal to attract customers, and plans to extend the value meal beyond its initial run, while also facing same-store sales declines internationally, including a 1.1% drop in operated markets like France and Germany, and a 1.3% decline in licensed markets such as China and Japan.
McDonald’s reported quarterly earnings and revenue that fell short of analysts’ expectations, reflecting a decline in same-store sales across all divisions. The company posted earnings per share of $2.97, adjusted, compared to the anticipated $3.07, and reported revenue of $6.49 billion, missing the expected $6.61 billion. The fast-food giant’s second-quarter net income was $2.02 billion, or $2.80 per share, down from $2.31 billion, or $3.15 per share, from the same period last year. Excluding charges related to the forthcoming sale of its South Korean business and other items, McDonald’s adjusted earnings per share were $2.97.
Revenue for the quarter remained relatively flat year-over-year. However, same-store sales decreased by 1%, contrary to the 0.4% growth predicted by StreetAccount. This marks the first decline in companywide same-store sales since the fourth quarter of 2020. In the U.S., same-store sales dropped 0.7%, a stark contrast to the 10.3% growth reported a year ago, which had been bolstered by the success of the Grimace Birthday Meal. Over the past year, consumer spending at fast-food chains has decreased as diners no longer perceive them as offering good value. Consequently, McDonald’s U.S. foot traffic declined during the quarter.
Executives have previously highlighted the increased competition for customers in a weakened consumer environment. In response, McDonald’s has introduced discounts to attract diners, launching a $5 meal deal in late June, just days before the end of the quarter. Recently, the company informed its U.S. operations that it would extend the value meal beyond its initial four-week period, indicating it was successfully bringing back customers.
Internationally, McDonald’s is also striving to attract more diners. Its international operated markets division, which includes key markets like France and Germany, experienced a 1.1% drop in same-store sales for the quarter. The international developmental licensed markets unit, covering regions such as China and Japan, saw same-store sales decline by 1.3%. The company continues to navigate challenges, including the impact of brand boycotts in the Middle East and ongoing struggles in the Chinese market.
In summary, McDonald’s faced a challenging quarter with declines in same-store sales and missed financial targets, reflecting broader consumer trends and increased competition. Despite these setbacks, the company is actively implementing strategies to regain customer traffic both in the U.S. and abroad.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/29/mcdonalds-mcd-q2-2024-earnings.html
