McDonald’s reports negative global comparable sales growth for Q2

McDonald’s Corporation (NYSE:MCD) slipped in early trading on Monday after posting its Q2 earnings report.

Global comparable sales fell 1.0% for the restaurant giant in comparison to the +0.8% consensus expectation of analysts.

U.S. comparable sales were -0.7% vs. +1.0% consensus. Comparable sales results were driven by negative comparable guest counts, partly offset by average check growth due to strategic menu price increases. Successful restaurant level execution and continued digital and delivery growth positively contributed to results.

The International Operated Markets segment reported a 1.1% decline in comparable sales increase during the quarter, vs. +1.9% consensus. Segment performance was impacted by negative comparable sales across a number of markets, driven by France.

The International Developmental Licensed Markets segment saw a 1.3% comparable sales decline vs. -0.4% consensus. The continued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in Latin America and Japan.

Consolidated operating income decreased 6% during the quarter and was down 5% on a constant currency basis. EPS was $2.97 vs. $3.17 consensus and $3.15 a year ago.

Looking ahead, McDonald’s (MCD) sees operating margin in the full year being in the mid-to-high 40% range and a free cash flow conversion rate in the 90% range. The restaurant operator expects to open 1,600 restaurants in 2024 on a net basis.

CEO update: “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.”

Shares of MCD dipped 0.15% in premarket action to $251.88 vs. the 52-week trading range of $243.53 to $302.39. Restaurant stocks such as Wendy’s (WEN), Shake Shack (SHAK), Yum! Brands (YUM), and Restaurant Brands International (QSR) are also on watch.