McDonald's Withdraws Guidance After Significant Sales Decline In March

McDonald's Corp MCD said Wednesday the coronavirus (COVID-19) "significantly disrupted" its business, but has confidence in its ability to "manage through the crisis."

Business Update

The global pandemic has changed the "world we live in" and McDonald's management said it needs to pivot to face a new reality. Most notably, the company is implementing changes to keep everyone safe, including contactless drive-thru and delivery options, social distancing practices, and an increased focus on personal safety equipment as well as cleaning procedures.

Management continues to work with suppliers on contingency plans to ensure a continuous supply of food to continue operating. So far, there has been zero breaks in its global supply chain and 75% of stores are open for drive-thru or delivery.

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Financial Update

McDonald's saw strong global comparable sales in most countries throughout January and February, but the company started to see a "significant decline" in performance as of mid-March.

U.S. comparable sales for March were down 13.4%, down 34.7% in International Operating Markets, down 19.4% in International Developmental Licensed Markets & Corporate. Global March same-store sales were down 22.2%.

But for the full quarter period ended March 31, U.S. comparable sales were up 0.1% but down 3.4% globally.

The coronavirus pandemic "remains fluid" and management can't reasonably estimate the full impact to its business at this time. But management can take steps to preserve its balance sheet strength, including the suspension of its share buyback program.

McDonald's also raised $6.5 billion through new debt in the first quarter. Throughout the rest of the year, management will lower its capital expenditures through fewer store upgrades and a reduced number of new store openings.

"As we navigate through this unprecedented crisis, we will continue to operate with a long-term mindset, in order to best position ourselves for the future," the company said.