McDonald’s Corp. should give investors a sense of how economic volatility around the globe is impacting the world’s biggest hamburger chain when it reports its second-quarter results before the market opens on Monday.
WHAT TO WATCH FOR: The Oak Brook, Ill.-based company has warned that the shaky economic environment in many parts of the world and rising expenses pressured its second quarter results. The company also said last month that foreign currency exchange rates are expected to hurt earnings by 7 cents to 9 cents per share.
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For May, the company said global sales at stores open at least 13 months rose 3.3 percent. That is a key metric because it excludes the volatility from newly opened or closed stores.
But the figure was dragged down by results in the Asia Pacific, the Middle East and Africa region — key growth areas for the company — where McDonald’s said sales fell 1.7 percent from a year ago.
McDonald’s noted that it’s working to improve results in various countries with locally relevant menu options and value offerings. Still, analysts have noted that the fast food chain is facing increasing competition at home and abroad.
WHY IT MATTERS: With more than 33,000 stores in 119 countries, McDonald’s is the world’s biggest hamburger chain and is often seen as a bellwether for the industry.
The company has consistently outperformed its rivals in recent years, in part by consistently rolling out new menu items — such as coffee frappes, fruit smoothies and snack wraps — that seem aimed at evolving consumer tastes. But McDonald’s is nevertheless facing the same pressures from the global economy and rising ingredient costs that are squeezing the entire industry.
WHAT’S EXPECTED: Analysts polled by FactSet on average expect a net income of $1.38 per share on revenue of $6.95 billion.
LAST YEAR’S QUARTER: The company earned $1.4 billion, or $1.35 per share, on revenue of $6.9 billion.
