US Markets
Monday, February 5th, 2024 3:18 pm EDT
Key Points
- Mixed Quarterly Results:
- McDonald’s reported mixed quarterly results, with turmoil in the Middle East impacting its sales in those markets, leading to a more than 2% fall in company shares.
- Financial Performance vs. Expectations:
- The reported earnings per share stood at $2.95 (adjusted) compared to the expected $2.82, while revenue was slightly below expectations at $6.41 billion against an anticipated $6.45 billion. Net income for the fourth quarter rose to $2.04 billion, or $2.80 per share, up from $1.9 billion, or $2.59 per share, a year earlier.
- Impact of Middle East Turmoil and Market Dynamics:
- The Middle East conflict, particularly the Israel-Hamas war, affected McDonald’s sales in the region, leading to boycotts and temporary closures of some locations. Sales weakened not only in the Middle East but also in markets like Malaysia, Indonesia, and France. The company acknowledged the negative impact on systemwide sales and revenue as long as the war continues.
- Global and Domestic Same-Store Sales:
- Global same-store sales grew by 3.4%, falling short of estimates, with the international developmental licensed markets segment experiencing a 0.7% increase. Domestic same-store sales rose 4.3%, in line with expectations, aided by menu price hikes, effective marketing, and digital sales growth.
- Challenges and Strategies for 2024:
- McDonald’s executives highlighted a slower start to 2024, citing tough year-over-year comparisons and adverse weather conditions in January as contributing factors. Despite challenges, the company reiterated its 2024 forecast of nearly 2% systemwide sales growth, excluding currency changes, driven by plans to open over 2,100 new locations and significant capital expenditures, with more than half allocated to new restaurants in the U.S. and international operated markets.
McDonald’s reported mixed quarterly results affected by turmoil in the Middle East, causing its shares to fall over 2% in early trading. In comparison with Wall Street expectations, the company posted adjusted earnings per share of $2.95, exceeding the anticipated $2.82, while revenue fell slightly short at $6.41 billion against an expected $6.45 billion. The fourth-quarter net income rose to $2.04 billion, or $2.80 per share, up from $1.9 billion, or $2.59 per share, a year earlier. Global same-store sales grew by 3.4%, falling short of estimates, primarily due to struggles in Middle Eastern sales related to the Israel-Hamas war, resulting in a 0.7% increase in the international developmental licensed markets segment. McDonald’s CEO, Chris Kempczinski, acknowledged sales weakening in markets outside the Middle East due to boycotts, particularly in Malaysia, Indonesia, and France. The ongoing impact of the war is expected to negatively affect systemwide sales and revenue. While domestic same-store sales rose by 4.3%, international operated markets, including Canada, Australia, and Germany, reported a 4.4% growth, below estimates of 5.1%. France experienced shrinking sales attributed to pricing backlash. McDonald’s executives noted a slower start to 2024, citing tough comparisons to the previous year and adverse weather conditions in January. The company reiterated its 2024 forecast, anticipating nearly 2% growth in systemwide sales from new restaurant openings, with plans to spend $2.5 billion to $2.7 billion on capital expenditures, focusing on expanding in the U.S. and international markets.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/05/mcdonalds-mcd-q4-2023-earnings.html
