McDonald's Q2 Earnings: Consumer Spending Shifts Hit Revenue And Operating Margins, Franchise Revenue Remains Flat

McDonald's Corp MCD reported a second-quarter FY24 sales decline of 0.12% year-on-year to $6.490 billion, missing the analyst consensus of $6.608 billion.

Global comparable sales decreased 1.0%, reflecting negative comparable sales across all segments. 

U.S. comparable sales slipped 0.7%, and systemwide sales decreased 1%.

The International Operated Markets segment decreased by 1.1%, and the International Developmental Licensed Markets segment decreased by 1.3%.

Sales by company-owned and operated restaurants declined 1% Y/Y to $2.46 billion, while sales from franchised restaurants remained flat at $3.94 billion.

Systemwide sales to loyalty members across 50 loyalty markets were over $26 billion for the trailing twelve-month period and approximately $7 billion for the quarter.

Total operating costs and expenses increased 5% to $3.57 billion. Operating income for the quarter declined 6% to $2.92 billion, with an operating margin of 44.99%, down from 47.8% year-over-year.

Adjusted EPS of $2.97 missed the analyst consensus estimate of $3.07.

"We are confident that Accelerating the Arches is the right playbook for our business and as consumers are more discriminating with their spend, we are focused on the outstanding execution of delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty," said CEO Chris Kempczinski.

Guidance: McDonald's expects net restaurant unit expansion to contribute nearly 2% to 2024 Systemwide sales growth in constant currencies.

It anticipates that the full-year 2024 Selling, general and administrative expenses will be about 2.2% of Systemwide sales, and the 2024 operating margin will be in the mid-to-high 40% range.

Price Action: MCD shares are trading higher by 0.65% at $263.65 premarket at the last check on Monday.

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