McDonald’s and other local stores remain closed due to COVID-19 in Times Square on April 13, 2020 in New York, New York.
Eduardo Munoz | Getty Images
McDonald’s On Thursday, it posted better-than-expected returns, driven by higher prices in the US and strong growth in international sales.
The company’s shares are up more than 2% in pre-market trading.
Here’s what the company reported compared to what Wall Street was expecting, based on an analyst survey by Refinitiv:
- Earnings per share: adjusted $2.28
- Revenue: $5.67 billion vs. $5.59 billion forecast
The fast-food giant reported first-quarter net income of $1.1 billion, or $1.48 per share, down from $1.54 billion, or $2.05 per share, a year earlier.
The company spent $27 million to pay rent, employee wages and supplier costs in Russia and Ukraine after suspending operations in both countries due to the war. McDonald’s has reported an additional $100 million charge for inventory in its supply chain that is likely to be spoiled by the temporary closure of its restaurants in Ukraine and Russia. Altogether, these costs reduced its earnings by 13 cents per share.
The company also said it had set aside $500 million, or 67 cents per share, for a potential settlement of an international tax issue, but did not disclose further details.
Excluding costs related to settling taxes, its restaurants in Ukraine and Russia and other items, McDonald’s earned $2.28 per share.
Net sales It rose 11% to $5.67 billion, beating expectations of $5.59 billion. Global store sales rose 11.8% in the quarter, supported by strong growth in markets such as France and the United Kingdom. Digital system-wide sales exceeded $5 billion in the quarter.
In the US, same-store sales rose 3.5%, topping StreetAccount’s estimate of 3.3%. The company attributed price increases and marketing promotions to growth in its home market. A year ago, the fast-food chain reported same-store sales growth of 13.6%, curbed by weak demand from early pandemic shutdowns.
The McDonald’s International Markets segment, which includes France, the UK and Australia, recorded a 20.4% growth in same-store sales. The company said reducing Covid-19 measures boosted sales in the quarter.
In the company’s Authorized International Development Markets segment, same-store sales rose 14.7%, driven by strong demand in Japan and Brazil. However, China saw same-store sales shrink during the quarter as the onset of Covid led to renewed shutdowns.