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McDonald’s Reports Double-Digit Earnings Dip Amid Pandemic -Withdraws Fiscal 2020 Outlook

By John F. Heerdink, Jr.

McDonald’s Corporation (MCD) reported its fiscal first-quarter earnings ending March 31 this week. The company witnessed a 17% decline in earnings caused by the COVID-19 pandemic. 

Highlights from the release:

  • Adjusted EPS of $1.47 per share and revenue of $4.71 was reported.
  • Net income of $1.11 billion, or $1.47 per share, a decrease from $1.33 billion, or $1.72 per share, reported a year earlier.
  • Net sales dropped 6% to $4.71 billion
  • Same-store sales declined by 3.4% in the first three months of the year.
  • Same-store sales fell 25% from mid-March through mid-April.
  • In McDonald’s international operated markets segment including France, Spain, and Italy, less than half of the restaurants are open. The segment saw quarterly same-store sales shrink 6.9% in the quarter.
  • The company’s international developmental licensed markets business like Brazil and Japan performed better with 80% of locations operating.
  • To ensure liquidity, the company suspended stock buybacks in mid-March also the company cut its planned capital expenditures by $1 billion due to fewer U.S. restaurant renovations and a reduction in new global locations.
  • Shares of the company fell 2.6% in premarket trading after the release.

The company looked uncertain with its 2020 outlook and long-term forecast issued in February due to the uncertainty related to the coronavirus pandemic and its impact on the economy.

“The exact trajectory of our recovery, however, is highly uncertain and dependent on many factors outside our control such as government mandates, the risk of a second wave of infections, the availability of testing and the overall economic backdrop,” stated CEO Chris Kempczinski.

McDonald’s Corporation (MCD) is the leading global foodservice retailer with nearly 37,000 locations in over 100 countries. The Corporation operates and franchises McDonald’s restaurants in the US and across the globe with over 90% of its restaurants owned and operated by local, independent businessmen and women. To learn more about McDonald’s Corporation (MCD) and to track its progress please visit the Vista Partners McDonald’s Coverage Page

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives. 

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(Read Original Story: McDonald’s earnings fall 17% as coronavirus leads to restaurant closures, plunging sales in CNBC)


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