McDonald’s reported a drop in global same-store sales of 22% for the month of March as the coronavirus pandemic ravaged the global economy.
The company withdrew its 2020 outlook from February and said it expects to spend about $1.4 billion on capital expenditures in 2020, down from about $2.4 billion.
McDonald’s said same-store sales grew 8.1% for the two months ended February 29 but then dropped 13% in March.
Fast-food still outperformed full-service restaurants, which saw their transactions fall 79% in the last week of March, according to NPD Group. Transactions at fast-food restaurants fell 40%.
“This unprecedented situation is changing the world we live in, and we will need to adapt to a new reality in its aftermath,” chief executive officer Chris Kempczinski said. “There will be more challenges and difficult business decisions to be made.”
McDonald’s raised $6.5 billion in cash in the debt markets during the first quarter. That figure included $2 billion of debt issuances, a $1 billion draw-down from a new short-term line of credit, and an additional $3.5 billion of bonds issued, it said. It also suspended share buybacks to preserve cash.
“The business update implies McDonald’s is well-positioned for an eventual recovery following Jan/Feb momentum,” BMO Capital Markets analyst Andrew Strelzik said.
The company said about 75% of its stores remained operational during the quarter, with most focusing on drive-thru, delivery, and takeout orders. It said it would defer rent and royalties for franchisees.
The company said overall its global same-store sales fell 3.4% in the first quarter, compared with an expected drop of 0.91%, according to a sampling of analysts by Refinitiv. Global same-store sales had risen 7.2% at the start of the quarter.
McDonald’s shares were up more than 1% in midday trading Wednesday.
The company’s share price is down 11% year-to-date.
Suhaimi Abdullah/Getty Images