Customers sit in McDonald’s outdoor seats in Union Square as the city moves to Phase 3 of its reopening following restrictions imposed to curb the coronavirus pandemic on July 7, 2020 in New York City.
Alexi Rosenfeld | fake pictures
McDonald’s reported Tuesday that its quarterly revenue fell by nearly a third as coronavirus blocking measures outside the US affected sales of its fries and cheeseburgers.
While recovery in the United States has been comparably stronger, recent increases in Covid-19 cases have forced some states and cities to re-implement restrictions aimed at controlling the spread of the virus. As a result, McDonald’s did not offer any forecast for its future performance.
The company’s shares fell more than 2% in premarket trading.
“Our strong driving presence and the investments we’ve made in delivery and digital in recent years have served us well in these uncertain times,” CEO Chris Kempczinski said in a statement. “We saw continuous improvement in our results during the second quarter as markets reopened worldwide.”
Still, McDonald’s said it hopes to speed up the closure of restaurants in the United States this year and permanently close about 200 locations. More than half of them are lower-volume locations within Walmart stores. The company forecasts 350 new net locations in 2020.
This is what the company reported for the quarter ended June 30 compared to what Wall Street expected, according to an analyst survey by Refinitiv:
- Earnings per share: 66 cents, adjusted, vs. 74 cents expected
- Revenue: $ 3.77 billion vs. $ 3.68 billion expected
The fast food chain reported second-quarter net income of $ 483.8 million, or 65 cents a share, down from $ 1.52 billion, or $ 1.97 a share, a year earlier. Coronavirus-related expenses, including $ 200 million in marketing support in US and international operated markets, affected earnings.
Excluding items, McDonald’s earned 66 cents a share, losing the 74 cents a share expected by analysts polled by Refinitiv.
Although it was McDonald’s biggest failure in more than three decades, estimates covered a wide range of 50 cents a share to $ 1.27 a share. The coronavirus pandemic has made earnings difficult to forecast.
Net sales fell 30% to $ 3.77 billion, exceeding expectations of $ 3.68 billion. Global sales in the same store decreased by 23.9%.
Sequentially, global sales at the same company store improved. In its home market, sales at the same store decreased by 19.2% in April, but decreased only 2.3% in June. About 2,000 of its American restaurants have reopened their dining rooms, but the company stopped those reopens in early July as coronavirus cases re-emerged.
Outside of the US, restaurant closings hampered sales, but 94% of locations had reopened to partial operations by the end of the quarter. Its segment of internationally operated markets, which includes France and the United Kingdom, saw sales in the same store drop by two-thirds in April. For June, sales in the same store of the unit decreased 18.4%.
In the international segment of markets with a development license, which includes China and Brazil, sales in the same store fell 32.3% in April, 20% in May and 20.3% in June. A bright spot was Japan, which reported same-store sales growth for the quarter.
McDonald’s includes locations that were temporarily closed in its sales calculations at the same store.
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