McDonalds and other local stores remain shuttered due to COVID-19 at Times Square on April 13, 2020 in New York, NY.

Eduardo Munoz | Getty Images

McDonald’s on Thursday said its first-quarter earnings fell 17% as the coronavirus pandemic led to restaurant closures and plunging sales. 

Shares of the company fell less than 1% in premarket trading.

Here’s what the company reported for the quarter ended March 31:

  • Earnings per share: $1.47
  • Revenue: $4.71 billion

The global fast-food chain reported fiscal first-quarter net income of $1.11 billion, or $1.47 per share, down from $1.33 billion, or $1.72 per share, a year earlier.

Net sales dropped 6% to $4.71 billion as the company observed “dramatic changes in consumer behavior” stemming from the pandemic.

Wall Street anticipated earnings per share of $1.57 on revenue of $4.65 billion, based on a survey of analysts by Refinitiv. However, it’s difficult to compare reported earnings to analyst estimates for McDonald’s quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.

McDonald’s reported global same-store sales declines of 3.4% in the first three months of the year after shelter-at-home orders and social distancing measures took a toll on sales in March. 

In the United States, quarterly same-store sales were nearly flat after March same-store sales plunged 13.4%. The company has made tweaks to its U.S. menu, including pulling all-day breakfast, to simplify operations within restaurants. About 99% of U.S. restaurants are open, as of Thursday, but nearly all are operating drive-thru, delivery and takeout only.

In McDonald’s international operated markets segment, which includes France, Spain and Italy, less than half of restaurants are open. The segment saw quarterly same-store sales contract 6.9% in the quarter. 

The company’s international developmental licensed markets business, which includes Brazil and Japan, is faring better, with 80% of locations operating. About 99% of Chinese restaurants have reopened, but the company said demand is down because consumers have not fully resumed their routines prior to the crisis. The segment’s quarterly same-store sales fell 4.3%.

McDonald’s has withdrawn its 2020 outlook and long-term forecast issued in February, citing the uncertainty related to the coronavirus pandemic and its impact on the economy. The chain previously expected earnings per share growth in the high single digits and systemwide sales growth in a range of 3% to 5%.

To preserve liquidity, the company suspended stock buybacks in mid-March. McDonald’s has also cut its planned capital expenditures by $1 billion due to fewer U.S. restaurant renovations and a reduction in new global locations.

McDonald’s is deferring rent for three months for franchisees to lessen the financial blow of falling sales, but U.S. franchisees are asking for more financial relief to stay afloat during the pandemic, straining their relationship with the company. 

Read the full earnings report here.

This is a breaking news story. Please check back for updates.

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