McDonald’s quarterly report was worse than Wall Street expectations



McDonald’s reported a stronger decline in fourth-quarter earnings than analysts had predicted, and also missed earnings estimates. While US sales were up 5.5%, international sales were down 7.4%. McDonald’s ended 2020 with declining annual revenues and profits.

McDonald’s (MCD) shares declined on Thursday after the world’s largest fast food chain released its Q4 financials (October-December 2020).

The new rise in COVID-19 cases in the US and other countries and related government restrictions have hurt McDonald’s sales, especially in regions where there were fewer McDrive outlets and a less developed digital sales model.

McDonald’s fourth quarter key figures were below last year and below the previous third quarter (July-September).

McDonald’s reported a 14% decline in earnings per share (from last year) to $ 1.70, below analysts’ expectations of $ 1.78.

The amount of quarterly profit fell to $ 1.38 billion from $ 1.57 billion a year earlier. The company attributed this to higher $ 30 million in closing costs and lower sales margins.

McDonald’s revenue for the holiday quarter was down 1% year-over-year and 2% year-over-year to $ 5.31 billion, also below the analyst average of $ 5.37 billion. McDonald’s for the last 2 years is available here.

McDonald’s global comparable sales were down 1.3% in the fourth quarter. In the US, where the company has about 14,000 restaurants, many McDrive locations, and fast-growing digital in-app sales, sales grew 5.5%.

In the US, McDonald’s executives celebrated a successful ad campaign featuring celebrity Travis Scott Meal.

However, sales in the international management segment and the international development licensing segment (franchise outlets) declined by 7.4% and 3.6%, respectively. The main drop in sales was in France, Germany, Italy and Spain.

At the same time, sales in Australia and the UK were positive throughout the quarter. In Australia, McDonald’s saw an increase in digital sales and average check numbers.

Results of 2020 McDonald’s

The company’s total revenues for 2020 decreased by 10% from $ 21.36 billion to $ 19.2 billion, and profits by 21% from $ 6 billion to $ 4.73 billion.

At the same time, McDonald’s management predicts that global sales in 2021 will “grow and surpass 2019,” but no specific numbers were provided.

Asked about the prospect of raising the federal minimum wage in the US to $ 15, McDonald’s CEO Chris Kempchinski said this could be addressed through “reasonable” menu prices and savings.

“As long as it’s done in stages and is fair to everyone, McDonald’s will work great,” Kempchinski said.

“2020 will be remembered for McDonald’s as one of the most challenging yet inspiring moments in our long history,” said McDonald’s President and CEO.

Kevin Ozan, chief financial officer of McDonald’s, told investors that the company still expects to open 500 new restaurants around the world in 2021, for which there will be $ 2.3 billion in capital spending.

The company also plans to introduce a loyalty program this year.

“By investing in the future and leveraging our competitive edge through our ‘Accelerating the Arches’ strategy of McDrive, delivery and our growing digital presence, we are confident that we can continue to capture market share and deliver long-term sustainable growth for all stakeholders. ”- said McDonald’s.

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