McDonalds and other local stores remain shuttered due to COVID-19 at Times Square on April 13, 2020 in New York, NY.
Eduardo Munoz | Getty Images
McDonald’s on Thursday reported better-than-expected revenue, fueled by price hikes in the U.S. and strong international sales growth.
Shares of the company rose more than 2% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.28 adjusted
- Revenue: $5.67 billion vs. $5.59 billion expected
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 for leases, employee wages and supplier costs in Russia and Ukraine after suspending its operations in both of those countries due to the war. McDonald’s reported an additional $100 million charge for inventory in its supply chain that will likely spoil because of the temporary closures of its restaurants in Ukraine and Russia. Altogether, those costs dragged its earnings down by 13 cents per share.
The company also said that it has reserved $500 million, or 67 cents per share, for a potential settlement related to an international tax matter, but it did not share more details.
Excluding costs related to the tax settlement, its restaurants in Ukraine and Russia and other items, McDonald’s earned $2.28 per share.
Net sales rose 11% to $5.67 billion, beating expectations of $5.59 billion. Global same-store sales climbed 11.8% in the quarter, fueled by strong growth in markets like France and the United Kingdom. Digital system-wide sales surpassed $5 billion in the quarter.
In the United States, same-store sales increased 3.5%, surpassing StreetAccount estimates of 3.3%. The company credited price increases and marketing promotions for growth in its home market. A year ago, the fast-food chain reported same-store sales growth of 13.6% as it lapped the weak demand of the early pandemic lockdowns.
McDonald’s international operated markets segment, which includes France, the U.K. and Australia, reported same-store sales growth of 20.4%. The company said the reduction of Covid-19 measures boosted sales in the quarter.
In the company’s international developmental licensed 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 Covid’s resurgence resulted in renewed lockdowns.