McDonald’s earnings miss estimates as diners pull back, Middle East boycotts hit sales

McDonald’s
reported
mixed
quarterly
results Tuesday as
its
reorganization
weighed
on
its
profit
and
boycotts
hurt
its
Middle
Eastern
sales.

Here’s
what
the
company
reported
compared
with
what
Wall
Street
was
expecting,
based
on
a
survey
of
analysts
by
LSEG:

• Earnings
  per
  share:
  $2.70
  adjusted
  vs.
  $2.72
  expected
• Revenue:
  $6.17
  billion
  vs.
  $6.16
  billion
  expected

McDonald’s
reported
first-quarter
net
income
of
$1.93
billion,
or
$2.66
per
share,
up
from
$1.8
billion,
or
$2.45
per
share,
a
year
earlier.
The
company
recorded
a
pretax
charge
of
$35
million
tied
to
its
reorganization,
which
was
announced
more
than
a
year
ago.

Excluding
restructuring
charges,
the
fast-food
giant
earned
$2.70
per
share.

Net
sales
rose
5%
to
$6.17
billion.
The
company’s
global
same-store
sales
increased
1.9%
in
the
quarter,
falling
short
of
StreetAccount
estimates
of
2.1%.

McDonald’s
reported
U.S.
same-store
sales
growth
of
2.5%,
missing
expectations
of
2.6%.
The
chain
said
that
the
average
check
grew
thanks
to
higher
menu
prices.
But by raising
prices, McDonald’s
has
also scared
away
some
of
its
low-income
customers.

Demand
in
the
company’s
international
developmental
licensed
markets
was
even
weaker.
McDonald’s
said
the
segment’s
same-store
sales
fell
0.2%,
marking
the
first
time
since
the
pandemic that one
of
the
chain’s
divisions
reported a same-store
sales decline.

The
segment
includes
restaurants
in
the
Middle
East,

which
have
been
roiled
by
the
Israel-Hamas
war
and
related
boycotts, which
started after McDonald’s Israeli
licensee
offered
discounts
to
soldiers.
Earlier
this
month,

McDonald’s
bought
the
225
restaurants
operated
by
its
Israeli
franchisee.

However,
the
company
said
that same-stores sales
in
other
licensed
markets,
like
Japan
and
Latin
America, grew for
the
quarter.
McDonald’s
international
operated
markets
segment,
which
includes
Germany
and
the
United
Kingdom,
reported
same-store
sales
growth
of
2.7%.
France’s
same-store
sales
declined
in
the
quarter.