McDonald’s Corp missed Wall Street estimates for quarterly profit on Thursday as some restaurants in Europe and elsewhere remained closed to curb the spread of the coronavirus pandemic.
Shares of McDonald’s, a Dow 30 component, fell more than 4 per cent after Wall Street opened. The stock has lost about 5 per cent so far this year.
Chief Executive Officer Chris Kempczinski also said he believed the world’s largest fast-food company “reached a trough in terms of number of restaurants closed in late March.”
About 75 per cent of its 39,000 restaurants around the world were operational as of Thursday, including almost all of its nearly 14,000 restaurants in the United States.
The company also said it had resumed operations in nearly all of its restaurants in China, where the virus was first detected late last year, although demand remained low as consumers had not fully returned to their routines.
In the United States, the company’s biggest market, drive-thru orders have risen to 90 per cent of sales during the outbreak, up from about 66 per cent normally, and its ability to offer quick, affordable food will be an advantage in coming months, executives said.
“As markets start to open up, this desire to really return to familiar favorites, to brands that are known, is very, very powerful,” Kempczinski said during an earnings call.
The health crisis, which has infected over a million in the United States and killed about 60,000, has forced government-led lockdowns.
That has led to losses for restaurants as they close completely or shift to carry-out, drive-thru and delivery, particularly in the United States.
Earlier this month, McDonald’s withdrew its outlook for the year, joining other restaurant chains, citing uncertainties related to the health crisis and its impact on global economic conditions.
The burger chain had pre-announced a 3.4 per cent fall in first-quarter comparable store sales, with U.S. sales rising just 0.1 per cent powered by strong demand before the pandemic.
In March alone, global comparable sales fell 22.2 per cent, the company had said in early April.
Net income fell to $1.11 billion, or $1.47 per share, in the first quarter ended March 31 from $1.33 billion, or $1.72 per share, a year earlier.
Analysts were expecting a profit of $1.57 per share, according to IBES data from Refinitiv.
Revenue fell 6.2 per cent to $4.71 billion, but were above Wall Street estimates of $4.65 billion.
Even so, some analysts see the company as a safe bet for troubled times.
McDonald’s offers “appealing blue chip characteristics amid a fluid near term set-up,” including “the cleanest balance sheet in (quick-service restaurants), the benefits of scale that manifest in superior customer value perceptions and industry-leading U.S. franchisee cash flows,” wrote Cowen analyst Andrew Charles in a note.
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