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McDonald’s Shares Fall After Company Announces Decreased Global Sales
October 30, 2024
McDonald’s shares fell 2.7% in premarket trading yesterday following the company’s announcement that global sales have decreased in Q3 2024 for the second consecutive quarter.
Seeking Alpha reports that the fast-food giant posted its Q3 2024 report on Tuesday, Oct. 29, and the stock market did not look good following that announcement. Compared to analysts’ consensus projection of -0.7%, the restaurant giant’s global comparable sales dropped 1.5%.
Comparable sales in the U.S. increased by +0.3% in Q2, which was slightly above the growth target of +0.2% as predicted. The average check growth was partially offset by slightly negative comparable guest counts, according to comparable sales figures. Comparable sales results were somewhat better due to good execution at the restaurant level, effective value and marketing initiatives showcasing the core menu, and ongoing development in digital and delivery.
Both on a constant currency basis and during the quarter, consolidated operating income fell by 1%. EPS was $3.23 as opposed to $3.19 a year ago.
To achieve long-term growth worldwide and succeed in this climate, McDonald’s CEO Chris Kempczinski stated that the fast-food giant will keep using the Accelerating the Arches strategy developed by the Chicago-based company. McDonald’s projects a free cash flow conversion rate of 90%, an operating profit rate of mid-to-high 40%, and more than 1,600 net restaurant additions in 2024.
McDonald’s Sales Affected by E. Coli Outbreak?
There is some speculation that while Q3 2024 sales weren’t affected by the recent McDonald’s E. coli outbreak, more recent sales have been.
McDonald’s announced on Sunday, Oct. 27, that Quarter Pounders are once again available at hundreds of its locations after testing ruled out beef patties as the cause of the E. coli poisoning outbreak linked to the popular burgers that killed one person and infected at least 75 others across 13 states, according to the Associated Press.
The U.S. Food and Drug Administration continues to believe that slivered onions from a single supplier are the most likely source of contamination, according to a McDonald’s statement. The fast-food business said that it will resume serving the Quarter Pounder at the affected locations this week, without the sliced onions.
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