McDonald's shares slip 5% on soft global comps; Q4 report card
McDonald's released Q4 earnings results this morning, reporting revenue of $6.41 billion, a 8.1% increase year-over-year, compared to the estimated $6.45 billion. The company reported earnings per share (EPS) of $2.80, compared to $2.59 in the same period last year. Adjusted EPS was $2.95, compared to $2.59 in the prior year, outperforming the estimated $2.82.
Global comparable sales increased 3.4%, reflecting positive comparable sales across all segments:
* U.S. increased 4.3%
* International Operated Markets segment increased 4.4%
* International Developmental Licensed Markets segment increased 0.7%, reflecting the impact of the war in the Middle East
McDonald's global comparable sales grew by 9% for the year and over 30% since 2019. Systemwide sales to loyalty members were over $20 billion for the full year and over $6 billion for the quarter across 50 loyalty markets, with full year growth of more than 45% over prior year.
Consolidated revenues increased 8% (6% in constant currencies). Systemwide sales increased 6% (5% in constant currencies). Consolidated operating income increased 8% (6% in constant currencies). Results included $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 the Company's Accelerating the Arches growth strategy, including restructuring costs associated with Accelerating the Organization. Excluding these charges, consolidated operating income increased 14% (11% in constant currencies).
The U.S. segment experienced strong average check growth driven by strategic menu price increases. Successful restaurant level execution, effective menu and marketing campaigns and continued digital and delivery growth contributed to strong comparable sales results.
The International Operated Markets segment reported positive comparable sales in most markets, led by the U.K., Germany, and Canada, partly offset by negative comparable sales in France.
The International Developmental Licensed Markets segment reported positive comparable sales in all geographic regions, with the exception of the Middle East, which was impacted by the war in the region.
In conclusion, McDonald's Q4 earnings report demonstrated strong growth in both revenue and earnings per share, driven by the company's successful global expansion and effective marketing campaigns. The company's Accelerating the Arches growth strategy, including restructuring costs associated with Accelerating the Organization, contributed to the strong performance. However, the war in the Middle East had a negative impact on the International Developmental Licensed Markets segment. Overall, McDonald's Q4 earnings report reflects the company's ongoing commitment to delivering value to its customers and shareholders.
McDonald's has a history of consistently delivering strong earnings results, and this quarter was no exception. However, the company faced some challenges, particularly in the International Developmental Licensed Markets segment, which was impacted by the war in the Middle East. Despite these challenges, McDonald's was able to maintain its positive comparable sales growth and increase its earnings per share.
The company's Accelerating the Arches growth strategy, which includes restructuring costs associated with Accelerating the Organization, has been a key driver of its success. This strategy has allowed McDonald's to maintain its strong financial performance while also investing in its future growth.
Looking ahead, McDonald's remains committed to its growth strategy and will continue to focus on delivering value to its customers and shareholders. The company's strong performance in Q4 is a testament to its resilience and ability to adapt to changing market conditions. With its ongoing expansion and effective marketing campaigns, McDonald's is well-positioned for continued success in the future.
Shares of MCD slipped approx. 5% in reaction to the report. The comp store sales were viewed as relatively light and missing expectations for the first time in eleven quarters. Shares of MCD have spent most of 2024 trading in a tight range between $280-305. The stock is hovering above its 50-sma ($291) ahead of the open. We would expect the stock to find support at the low end of its 2024 trading range and to continue its consolidation pattern.