McDonald's Q4 Earnings Fall Short, Stock Struggles with Sales Decline and E. coli

Financial Results

Quarter ended December 31, 2024:

* Revenue: $6.39 billion (missed expectations of $6.45 billion)
* Adjusted EPS: $2.80 (below Wall Street estimate of $2.84)

Year-end fiscal 2024:

* Revenue: $25.92 billion (missed expectations of $25.99 billion)
* Adjusted EPS: $11.39 (below estimate of $11.74)

Key Performance Indicators

Global Same-Store Sales:

* Quarter: +0.4% (vs. expected decline of -0.91%)
* Year-end: -0.1% (vs. expected decline of -0.39%)

U.S. Same-Store Sales:

* Quarter: -1.4% (year-over-year decline due to E. coli outbreak)
* Year-end: +0.2% (vs. expected growth of +0.44%)

International Same-Store Sales:

* Owned stores:
* Quarter: -0.1% (vs. expected decline of -1.22%)
* Year-end: -0.2% (vs. expected decline of -0.50%)
* Franchised stores:
* Quarter: +4.1% (vs. expected decline of -0.38%)
* Year-end: -0.3% (vs. expected decline of -1.39%)

Market Outlook

McDonald's aims to regain foot traffic in 2025 through its McValue menu platform and new menu items. International-owned stores saw positive same-store sales growth in the Middle East, Japan, and China.

Despite improving same-store sales, net income declined by 3% for the year to $8.22 billion. Franchise operators are concerned about over-reliance on promotions impacting margins.

Analysts predict positive recovery in the second half of the year due to easier sales comparisons. However, franchisees express concerns about weaning consumers off heavy discounts and promotions.

McDonald's stock price remains subdued amid concerns about underperformance, supply chain issues, and increased competition.