- McDonald’s (MCD) stock fell 1% to $316.46 after reporting a 3.6% U.S. same-store sales drop, the worst since Q2 2020’s 8.7% decline, amid cautious consumer spending.
- Q1 earnings of $2.67 per share beat estimates by $0.01, but revenues dropped 3.5% to $5.96 billion, missing the $6.1 billion consensus, with global comparable sales down 1%.
- Loyalty program sales reached $31 billion over the past year and $8 billion in Q1, despite economic pressures impacting low- and middle-income consumer traffic.
McDonald’s Corp. (MCD) faced a challenging quarter as its stock dipped 1% to $316.46 on Thursday, reflecting investor concerns over a 3.6% decline in U.S. same-store sales, the steepest drop since the 8.7% plunge in Q2 2020 during Covid-related lockdowns. The company reported first-quarter earnings of $2.67 per share, slightly beating the consensus estimate of $2.66, but revenues fell 3.5% year-over-year to $5.96 billion, missing the expected $6.1 billion. Global comparable sales also weakened, decreasing 1% overall, influenced by a prior-year Leap Day comparison, with U.S. sales down 3.6%, International Operated Markets down 1%, and International Developmental Licensed Markets up 3.5%.
The U.S. market, McDonald’s largest, grappled with adverse weather and a cautious consumer base, as noted by CEO Chris Kempczinski, who highlighted a significant slowdown in quick-service restaurant traffic. Low-income consumer traffic dropped nearly double digits compared to the prior year, while middle-income consumer traffic also saw substantial declines, signaling broader economic pressures impacting dining habits. Despite these challenges, McDonald’s loyalty program showed resilience, with systemwide sales to loyalty members across 60 markets reaching over $31 billion for the trailing twelve months and approximately $8 billion for the quarter, underscoring the company’s ability to retain dedicated customers.
The broader economic environment, marked by cost-conscious consumer behavior, has pressured McDonald’s performance, particularly in its home market, where inflation and economic uncertainty have reduced dining-out frequency. The company’s global operations displayed mixed results, with growth in International Developmental Licensed Markets offering some offset to weaker performance in the U.S. and International Operated Markets. McDonald’s continues to navigate these headwinds by leveraging its loyalty program and operational efficiencies, but the latest results highlight the difficulties of sustaining growth in a tough economic climate, with consumer spending trends likely to remain a key focus for investors.
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