NEW YORK – McDonald’s Corporation reported financial results for the fourth quarter of the prior fiscal year and the first quarter of the current fiscal year. In both quarters, the company’s revenue and earnings per share exceeded consensus analyst forecasts.
Fourth Quarter Results
For the fourth quarter, McDonald’s reported adjusted earnings per share of $3.12, compared to an analyst consensus estimate of $3.05. Net revenue was $7 billion, versus an expected $6.84 billion. Net income for the period was $2.16 billion ($3.03 per share), up from $2.02 billion ($2.80 per share) in the same quarter of the prior year.
Global same-store sales increased 5.7%, exceeding the 3.9% projection.
Same-Store Sales (Q4)
- Global: Increased 5.7%, exceeding the 3.9% projection.
- U.S.: Increased 6.8%.
- International Operated Markets (incl. Germany, Australia): Increased 5.2%.
- International Developmental Licensed Markets: Increased 4.5%.
Company executives attributed U.S. sales growth to specific promotions, including the Grinch meal, Monopoly game, and the reintroduction of Extra Value Meals (offering a discount of approximately 15% on combo meals).
First Quarter Results
For the first quarter, McDonald’s reported adjusted earnings per share of $2.83, exceeding the consensus estimate of $2.75. Revenue rose 9% year-over-year to $6.52 billion, slightly above the $6.47 billion forecast. Net income was $1.98 billion ($2.78 per share), up from $1.87 billion ($2.60 per share) in the prior year’s quarter.
Global same-store sales increased 3.8%, slightly below the 3.9% consensus (per Bloomberg).
Same-Store Sales (Q1)
- Global: Increased 3.8%, slightly below the 3.9% consensus.
- U.S.: Increased 3.9%, marking the fourth consecutive quarter of growth but a slowdown from the previous quarter’s 7% increase.
- International Operated Markets (incl. France, Germany, Australia): Increased 3.9%.
- International Developmental Licensed Markets (incl. Japan): Increased 3.4%. Japan was reported as the top performer in this segment.
Commentary on Consumer Environment and Strategy
- Consumer Pressure: CFO Ian Borden stated that consumers, particularly low-income consumers, are under financial pressure. He noted that early results from a new under-$3 menu (which replaced a buy-one-get-one promotion) were “encouraging.”
- Commodities: Borden reiterated the company’s expectation for U.S. food and paper inflation in the “low to mid single digit range” for the year, while noting continued pressure on beef prices.
- Value Strategy: CEO Chris Kempczinski described the operating environment as “challenging.” The company has pursued a dual strategy involving value offerings (including the under-$3 menu, a $4 breakfast deal, and existing $5–$6 meal deals) alongside premium limited-time items.
New Menu Item Performance
In March, McDonald’s launched the Big Arch burger. BTIG analyst Peter Saleh wrote that initial results were “pretty good” and that sales increased after a viral video of Kempczinski tasting the burger, but added that sales have since declined and the item will be removed from the menu soon.
Stock Performance
Following the first-quarter earnings release, McDonald’s stock rose approximately 1% in trading. The stock has underperformed the S&P 500 index year-to-date. Following the fourth-quarter announcement, shares rose 2% in extended trading.