McDonald’s on Wednesday reported quarterly earnings that topped analysts’ expectations as price hikes offset declining foot traffic in its U.S. restaurants.
Shares of the company, which has a market value of $161 billion, fell less than 1% in premarket trading. The stock is up 15% over the last 12 months, as of Tuesday’s close.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.97, adjusted, vs. $1.96 expected
- Revenue: $5.3 billion vs. $5.3 billion expected
- Global same-store sales: 5.9% vs. 5.2% expected
McDonald’s fourth quarter was marked by an executive shakeup after its board fired CEO Steve Easterbrook in November for having a consensual relationship with an employee. Chris Kempczinski, who formerly led the company’s U.S. division, was tapped to replace him.
The burger chain has struggled to reverse declining foot traffic to its U.S. restaurants as consumers lose their taste for fast food. It is also facing more competition from other chains like Wendy’s, who will launch breakfast nationwide this year.
McDonald’s is leaning into chicken to entice consumers. On Tuesday, the company announced it would add two chicken sandwiches to its breakfast menu. It is also testing a Southern-style chicken sandwich to rival those from Chick-fil-A and Restaurant Brands International’s Popeyes Louisiana Kitchen.
In the United States, its home market, same-store sales climbed 5.1% during the quarter, despite traffic to restaurants falling by 1.9% in 2019.
McDonald’s attributed its U.S. sames-store sales growth to price hikes, strong sales of core menu items like the Big Mac and positive impacts from high-tech store renovations that include self-order kiosks. The company expects to spend about $1.3 billion on capital expenditures in the U.S. in fiscal 2020, more than half of which will be spent on those renovations.
McDonald’s reported fiscal fourth-quarter net income of $1.57 billion, or $2.08 per share, up from $1.41 billion, or $1.82 per share, a year earlier.
Excluding a tax benefit related to new regulations, the global fast-food giant earned $1.97 per share, topping the $1.96 per share expected by analysts surveyed by Refinitiv.
Net sales rose 4% to $5.3 billion, meeting expectations. The company reported global same-store sales growth of 5.9%.
The company’s international operated segment, which includes top markets like Germany and France, reported same-store sales growth of 6.2% during the quarter. Restaurants in its smaller international developmental licensed segment, which includes China and Brazil, saw same-store sales growth of 6.6%.
During fiscal 2019, global systemwide sales surpassed $100 billion.
McDonald’s maintained its long-term forecast for earnings per share growth in the high-single digits and systemwide sales growth in a range of 3% to 5%. It said it will add about 1,000 net new restaurants globally in 2020 and expects global capital expenditures of about $2.4 billion.
Read the full press release here.
