McDonald’s Corporation faced mixed results in its quarterly report, with turmoil in the Middle East impacting its sales in those markets. The fast-food giant’s shares fell less than 1% in premarket trading following the announcement.
In the fourth quarter, McDonald’s reported a net income of $2.04 billion, or $2.80 per share, up from $1.9 billion, or $2.59 per share, in the same period last year. Excluding write-offs of unused software, restructuring costs, and other items, the company earned $2.95 per share. Net sales increased by 8% to $6.41 billion.
Despite these gains, the chain’s global same-store sales grew by 3.4% in the quarter, falling short of StreetAccount estimates of 4.7%, mainly due to struggles in its Middle Eastern sales. The international developmental licensed markets segment saw its same-store sales increase by just 0.7%, with the Israel-Hamas war being cited as a significant factor affecting sales.
McDonald’s stated in a regulatory filing that it is monitoring the evolving situation in the Middle East, expecting it to continue to negatively impact systemwide sales and revenue as long as the war persists. However, other markets in the segment, such as China and Japan, reported positive same-store sales growth for the quarter.
Domestic same-store sales in the U.S. rose by 4.3%, in line with expectations, boosted by menu price increases. Effective marketing and digital sales growth also contributed to the growth.
In the third quarter, McDonald’s noted a decline in U.S. traffic as low-income consumers reduced their spending, indicating a shift away from the chain’s higher prices. McDonald’s has been rolling out an improved version of its burgers nationwide, aiming to convince customers that its prices are justified.
The company’s international operated markets segment, including Canada, Australia, and Germany, reported a same-store sales growth of 4.4%, slightly lower than StreetAccount estimates of 5.1%. However, same-store sales decreased in France.
For 2024, McDonald’s reaffirmed its forecast from December that new restaurants will increase its systemwide sales growth by nearly 2%, excluding currency changes. The chain plans to open more than 2,100 new locations this year as part of its strategy to accelerate expansion and reach more customers.
McDonald’s also announced it will spend between $2.5 billion and $2.7 billion this year on capital expenditures, with more than half of that amount allocated to opening new restaurants in the U.S. and its international operated markets.
(Source: WSJ | CNBC | MarketWatch)
