McDonald's Earnings: What to Expect as the Golden Arches Report
Tuesday, Oct 29, 2024 12:05 am ET
1min read As McDonald's prepares to release its quarterly earnings, investors and analysts alike are eagerly anticipating the results. The fast-food giant has been on a steady growth trajectory, and its latest earnings report is expected to reflect this positive trend. Here's what to expect from McDonald's upcoming earnings report.
1. **Global Comparable Sales Growth**: McDonald's global comparable sales growth has been a key driver of its financial performance. In the fourth quarter of 2023, global comparable sales increased by 3.4%, reflecting positive comparable sales across all segments. For the full year, global comparable sales grew by 9.0%. This strong performance is a testament to the company's Accelerating the Arches strategy, which has driven over 30% comparable sales growth since 2019.
2. **U.S. vs. International Sales Growth**: The U.S. segment increased its comparable sales by 4.3% in the fourth quarter, while the International Operated Markets segment grew by 4.4%. The International Developmental Licensed Markets segment, however, saw a slower growth of 0.7% due to the impact of the war in the Middle East. This highlights the importance of international markets to McDonald's overall growth, as well as the challenges posed by geopolitical instability.
3. **Restructuring Costs and Software Write-offs**: McDonald's earnings per share were impacted by restructuring costs and software write-offs in the fourth quarter. The company recorded $72 million of pre-tax charges related to the write-off of impaired software no longer in use and $66 million of pre-tax charges related to its Accelerating the Arches growth strategy. Excluding these charges, diluted earnings per share increased by 14% (11% in constant currencies). As McDonald's continues to execute its growth strategy, investors should expect these charges to persist, albeit at a lower level.
4. **Loyalty Program Contribution**: McDonald's loyalty program has been a significant contributor to its systemwide sales. In 2023, systemwide sales to loyalty members were over $20 billion for the full year and over $6 billion for the quarter across 50 markets. With full year growth of more than 45% over the prior year, the loyalty program is expected to continue driving sales growth in the coming quarters.
As McDonald's reports its earnings, investors will be closely watching these key metrics to gauge the company's performance and growth prospects. The fast-food giant's strong global comparable sales growth, coupled with its successful loyalty program, positions it well for continued success in the future. However, investors should also be mindful of the impact of restructuring costs and geopolitical instability on the company's earnings.
1. **Global Comparable Sales Growth**: McDonald's global comparable sales growth has been a key driver of its financial performance. In the fourth quarter of 2023, global comparable sales increased by 3.4%, reflecting positive comparable sales across all segments. For the full year, global comparable sales grew by 9.0%. This strong performance is a testament to the company's Accelerating the Arches strategy, which has driven over 30% comparable sales growth since 2019.
2. **U.S. vs. International Sales Growth**: The U.S. segment increased its comparable sales by 4.3% in the fourth quarter, while the International Operated Markets segment grew by 4.4%. The International Developmental Licensed Markets segment, however, saw a slower growth of 0.7% due to the impact of the war in the Middle East. This highlights the importance of international markets to McDonald's overall growth, as well as the challenges posed by geopolitical instability.
3. **Restructuring Costs and Software Write-offs**: McDonald's earnings per share were impacted by restructuring costs and software write-offs in the fourth quarter. The company recorded $72 million of pre-tax charges related to the write-off of impaired software no longer in use and $66 million of pre-tax charges related to its Accelerating the Arches growth strategy. Excluding these charges, diluted earnings per share increased by 14% (11% in constant currencies). As McDonald's continues to execute its growth strategy, investors should expect these charges to persist, albeit at a lower level.
4. **Loyalty Program Contribution**: McDonald's loyalty program has been a significant contributor to its systemwide sales. In 2023, systemwide sales to loyalty members were over $20 billion for the full year and over $6 billion for the quarter across 50 markets. With full year growth of more than 45% over the prior year, the loyalty program is expected to continue driving sales growth in the coming quarters.
As McDonald's reports its earnings, investors will be closely watching these key metrics to gauge the company's performance and growth prospects. The fast-food giant's strong global comparable sales growth, coupled with its successful loyalty program, positions it well for continued success in the future. However, investors should also be mindful of the impact of restructuring costs and geopolitical instability on the company's earnings.
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