McDonald’s Corp. MCD released its first-quarter results before the opening bell on April 30. The fast-food chain’s revenue met Wall Street’s expectations, while earnings fell short of estimates as it was crippled by restaurant closures and limited operations on account of the Covid-19 pandemic .
By the numbers
The international hamburger chain registered first-quarter earnings of $1.47 per share, down 8% from the prior-year quarter. Revenue stood at $4.71 billion, which reflected a decline of 6% year over year. Analysts had forecasted earnings of $1.57 per share on $4.65 billion in revenue.
Comparable store sales fell 3.4% in the reported quarter as stay-at-home orders and social distancing measures weighed on the company’s sales in March.
In a statement, President and CEO Chris Kempczinski commented on the company's performance:
"Following our strong performance in 2019, McDonald’s began 2020 with exceptional global momentum, and our January and February sales were reflective of that trend. Since then, the global crisis caused by the COVID-19 pandemic has significantly disrupted our business, and we continue to operate in a very challenging and unpredictable environment. McDonald's has seen a lot over our 65 years and I'm confident that the actions we're taking will enable us to emerge from this crisis in a position of competitive strength.”
Segment performance
In the U.S., comps were flat from a year ago as same-store saled declined 13.4% in March. Although nearly 99% of the U.S. restaurants are open, they are only providing takeout and delivery services.
Comps in the international operated division (including France, Spain and Italy) tumbled 6.9% in the reported quarter as more than 50% of the restaurants are closed.
In the international development licenced segment, comps slipped 4.3%. Though 98% of McDonald’s stores are operating in China, the level of demand remains low as customers have not returned to their normal routines.
Guidance
McDonald's did not provide 2020 guidance, citing the global uncertainty caused by the Covid-19 pandemic.
“The exact trajectory of our recovery, however, is highly uncertain and dependent on many factors outside our control such as government mandates, the risk of a second wave of infections, the availability of testing and the overall economic backdrop,” Kempczinski said.
At the end of the quarter, the company had cash exceeding $5 billion. To strengthen its liquidity position, McDonald's has temporarily halted its stock buyback program. Additionally, it will reduce its capital spending program by roughly $1 billion for 2020.
Disclosure: I do not hold any positions in the stocks mentioned.
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