Warning of Weakening Global Consumer Health From McDonald’s

This is an important week for earnings, which are looking disappointing across all sectors, as McDonald’s showed earlier today. They highlighted a growing concern not just about the physical health, but their financial health as well. Executives noted that the fast-food industry which often serves as an early indicator when economic conditions tighten, is now being observed across major markets around the world, not just in the States.

There was a considerable slowdown in this sector of the food industry, with sales declining around the world for the first time in over three years, particularly affecting lower-income customers. This demographic has shown increasing financial strain, leading to a 1% drop in global comparable sales during the last quarter, contrary to analyst expectations of half of a percentage point increase. In the US alone, sales fell by 0.7% and  anticipates that consumers will continue to experience economic hardship for ‘at least the next several quarters’ and described the market landscape as ‘very competitive.’

McDonald’s Earnings Report

• Earnings per share: $2.97 adjusted vs. $3.07 expected
• Revenue: $6.49 billion vs. $6.61 billion expected
• Net income: $2.02 billion, or $2.80 per share, compared to $2.31 billion, or $3.15 per share, a year earlier
• Adjusted earnings: $2.97 per share, excluding charges related to the future sale of its South Korean business and other items
• Quarterly revenue: $6.49 billion, nearly flat compared to the previous year
• Same-store sales: Decreased by 1%, missing estimates of 0.4% growth (first decline since Q4 2020)
• U.S. same-store sales: Decreased by 0.7% for the quarter

McDonald’s Response to Pricing Concerns

To combat the perception that its food is overpriced, McDonald’s recently introduced $5 meal deals, which have performed better than expected. The company’s stock has fallen 15% since January, although we’re witnessing a bullish reversal today, with a 5% rise so far, as the price jumped from around $250 to $262. This move looks encouraging amid broader economic challenges. This week we have more major earnings coming out from multinationals, as listed below:

Major Multination Corporations Q2 Earnings Calendar

Tuesday

• Before Market Open: SoFi, Pfizer, PayPal, BP, P&G, Corning, Merck
• After Market Close: AMD, Microsoft, Starbucks, Pinterest

Wednesday

• Before Market Open: Boeing, Kraft Heinz, Altria
• After Market Close: Meta (Facebook), Qualcomm, Carvana, Lam Research, Western Digital

Thursday

• Before Market Open: Moderna, ConocoPhillips, Wayfair, SiriusXM
• After Market Close: Amazon, Apple, Intel, Coinbase, DraftKings

Friday

• Before Market Open: ExxonMobil, Chevron, Frontier Communications

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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