McDonald’s (NYSE:MCD) disclosed weaker-than-anticipated performance for the first quarter, citing challenges in certain markets impacted by consumer boycotts. Despite a rise in U.S. sales during the January-March period, the company faced difficulties in the Middle East and other regions where boycotts against the brand were prevalent.
The global fast-food giant revealed a 1.9% increase in worldwide same-store sales for the quarter, falling short of Wall Street’s projection of a 2.1% rise according to analysts surveyed by FactSet. In the U.S., same-store sales grew by 2.5%, attributed to price adjustments and heightened demand for delivery services. However, McDonald’s experienced a 0.2% decline in same-store sales in its international franchised markets, marking the first downturn since 2020 in this segment.
Boycotts in regions like the Middle East, Indonesia, and Malaysia, driven by perceived support for Israel, have significantly impacted McDonald’s sales for months. The boycotts commenced in October following an announcement by McDonald’s local Israeli franchisee regarding free meals for Israeli troops involved in the Gaza conflict.
In an effort to mitigate the repercussions, McDonald’s disclosed its acquisition of Alyonal Limited, its Israeli franchisee, in early April, thereby assuming control of the country’s 225 restaurants. However, financial details of the transaction were not disclosed.
For the January-March period, McDonald’s reported a 5% increase in revenue to $6.17 billion, aligning with Wall Street’s expectations. Net income also saw a 7% rise to $1.93 billion, with adjusted earnings, excluding restructuring charges, at $2.70 per share. Despite these positive figures, adjusted earnings fell slightly short of analysts’ estimates at $2.72 per share.
In premarket trading on Tuesday, McDonald’s shares experienced a 1.5% decline.
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