McDonald’s Corp. MCD released its second-quarter 2020 results before the opening bell on July 28.
The fast-food chain’s revenue met Wall Street’s expectations, while earnings fell short of estimates.
By the numbers
The international hamburger chain registered second-quarter earnings of $0.66 per share, down from the prior-year quarter. Revenue stood at $3.77 billion, which reflected a decline from $5.41 billion last year. Analysts had forecasted EPS of $0.74 per share on $3.68 billion in revenue.
Global comparable store sales tumbled 23.9% in the reported quarter, but improved month-to-month through the quarter.
In a statement, President and CEO Chris Kempczinski commented on the company's performance:
“Our strong drive-thru presence and the investments we've made in delivery and digital over the past few years have served us well through these uncertain times. We saw continued improvement in our results throughout the second quarter as markets reopened around the world.”
In addition to traffic losses due to the pandemic, the company incurred more than $200 million towards marketing support in the U.S. and international operated markets combined, which took a toll on earnings.
Segment performance
In the U.S., same-store sales dropped 8.7% year-over-year in the second quarter, but improved sequentially. While guest count was down, average check was strong, especially at breakfast. Even though almost all the U.S. restaurants are open, it is being run at reduced capacity.
Comps in the international operated division (including France, Spain, Italy and the UK) slipped 41.4% as sales were hampered by restaurant closures. Comps improved sequentially throughout the quarter in all the markets. One bright spot was Australia, which witnessed comps growth in May and June thanks to robust drive-thru performance.
In the international developed licenced segment, comps declined roughly 24%. The result reflected negative comps growth in China, which was partially offset by comps growth in Japan.
Restaurant updates and guidance
McDonald’s is planning to shut down approximately 200 U.S. restaurants this year, of which more than 50% would be the underperforming locations inside Wal-Mart WMT stores. The company is looking forward to opening 350 net new U.S. restaurants in 2020.
The company did not provide 2020 guidance, citing the global uncertainty caused by the pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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