\A sign is posted outside a McDonald’s restaurant on April 28, 2022 in San Leandro, California.
Justin Sullivan | Getty Images
McDonald’s said on Tuesday that both higher prices and value items drove U.S. same-store sales growth, which was stronger than expected in the second quarter.
However, chief executive Chris Kempczinski said the environment remained “challenging” as inflation and the war in Ukraine weighed on its quarterly results.
The company’s shares were roughly flat in premarket trading.
Here’s what the company reported compared to what Wall Street expected, according to a survey of analysts by Refinitiv:
- Earnings per share: $2.55 adjusted vs. $2.47 expected
- Revenue: $5.72 billion vs. $5.81 billion expected
McDonald’s reported second-quarter net income of $1.19 billion, or $1.60 per share, down from $2.22 billion, or $2.95 per share, a year earlier. The company reported a $1.2 billion charge related to the sale of its Russian business due to the war in Ukraine.
Excluding that charge, a French tax settlement and other items, the fast-food giant earned 2.55 cents per share.
Net sales fell 3% to $5.72 billion, hurt in part by the closing of McDonald’s Russian and Ukrainian restaurants.
Global same-store sales rose 9.7% in the quarter, driven by strong international growth. Russian locations were excluded from the company’s same-store sales calculations, but Ukrainian restaurants were included.
U.S. same-store sales rose 3.7% in the quarter, beating StreetAccount estimates of 2.8%. The company credited strategic price increases and its value offerings for its strong performance. Last quarter, McDonald’s executives said some low-income consumers were trading down to cheaper options in response to inflation.
The company’s International Development Licensed Markets division saw its same-store sales rise 16% in the quarter. Same-store sales fell in China as the government reimposed Covid restrictions, but growth in Brazil and Japan more than compensated for the market’s weak performance.
McDonald’s Internationally Operated Markets segment posted same-store sales growth of 13%, driven by strong demand in France and Germany.
Read the full earnings report here.