McDonald’s trades lower after reporting soft global sales; improvement seen in the U.S.
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McDonald’s Corporation (NYSE:MCD) slipped in early trading on Tuesday after posting its Q3 earnings report.
Global comparable sales fell 1.5% for the restaurant giant in comparison to the -0.7% consensus expectation of analysts.
U.S. comparable sales were +0.3% vs. +0.2% consensus and the negative growth mark in Q2. Comparable sales results were said to reflect average check growth, partly offset by slightly negative comparable guest counts. Effective value and marketing campaigns featuring the core menu, successful restaurant level execution and continued digital and delivery growth contributed to slightly positive comparable sales results.
The International Operated Markets segment reported a 2.1% decline in comparable sales increase during the quarter, vs. -0.9% consensus. Segment performance was impacted by negative comparable sales across a number of markets, driven by France and the U.K.
The International Developmental Licensed Markets segment saw a 3.5% comparable sales decline vs. -1.4% consensus. The continued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in Latin America.
Consolidated operating income decreased 1% during the quarter and was also down 1% on a constant currency basis. EPS was $3.23 vs. $3.20 consensus and $3.19 a year ago.
Looking ahead, McDonald’s (MCD) CEO Chris Kempczinski said the company will continue to follow the Chicago-based company’s Accelerating the Arches playbook to drive long-term growth globally and win in this environment. MCD expects over 1,600 net restaurant additions in 2024, a free cash flow conversion rate in the 90% range, and an operating margin rate in the mid-to-high 40% range.
Shares of McDonald’s (MCD) fell 1.8% in premarket action to $296.76 vs. the 52-week trading range of $243.53 to $317.90. Restaurant stocks such as Wendy’s (WEN), Shake Shack (SHAK), Yum! Brands (YUM), and Restaurant Brands International (QSR) are also on watch.