Another company which relies on the viability of the global consumer for its profits reports, and sure enough another company that misses: namely McDonalds. Moments ago the fast-food giant reported Q1 revenues of $6.70 billion, missing expectations of $6.72 billion (pushing the number of companies that have missed revenue estimates this earnings season once again into the majority), and also missing EPS estimates of $1.24, printing at $1.21, which however will not be a surprise to those who have been following our reporting on MCD's same store sales growth, or lack thereof, in the US. But while the collapse of the US consumer is well-known, and will hardly be an embarrassment for McDonalds management to reveal its exposure to it, what does the CEO blame the miss on? Why the weather of course.
From the release:
First Quarter results included:
- Global comparable sales increase of 0.5% reflecting higher average check, as well as negative guest traffic in the U.S. and Asia/Pacific, Middle East and Africa (APMEA)
- Consolidated revenues increase of 1% (3% in constant currencies)
- Consolidated operating income decrease of 1% (1% increase in constant currencies)
- Diluted earnings per share of $1.21, decrease of 4% (2% in constant currencies)
- Returned $1.2 billion to shareholders through dividends and share repurchases
In the U.S., comparable sales decreased 1.7% in the first quarter, and operating income declined 3%. Top-line results for the quarter reflected negative comparable guest traffic amid challenging industry dynamics and severe winter weather. Looking ahead, the U.S. remains focused on improving the restaurant experience through a continued commitment to operations and service excellence, customer engagement and menu choice to drive sales and profitability.
And a rather botched attempt at geopolitics:
During the first quarter, Europe grew comparable sales 1.4%, and operating income by 6% (4% in constant currencies). Positive sales performance in the U.K., France and Russia was partially offset by ongoing weakness in Germany. Across Europe, a combination of unique limited-time food events, premium offerings and everyday affordable pricing contributed to positive performance.
Uhm, strong Russia and weak Germany? Is the snow to blame for that too?
Regardless, how ironic is it that while MCD is bitching about snow in the winter, its own 2006 spin off, and the company that just keeps reporting soaring same store sales - yes, even during the harsh winter weather - Chipotle, said weather had zero impact on its own sales. Oh yes, that's right, because when it comes to excuses, anything will do, and the more companies that use the same excuse, the better. Apparently, the thinking goes, if everyone lies about the reason for their profit weakness with the same lie, it will make that lie more credible.