Customers sit at McDonald’s outdoor seating in Union Square as the city moves into Phase 3 of re-opening following restrictions imposed to curb the coronavirus pandemic on July 7, 2020 in New York City.

Alexi Rosenfeld | Getty Images

McDonald’s on Tuesday reported its quarterly revenue was slashed by nearly a third as coronavirus lockdown measures outside the U.S. weighed on sales for its French fries and cheeseburgers.

While recovery in the U.S. has been comparably stronger, recent surges in Covid-19 cases have forced some states and cities to reimplement restrictions aimed at controlling the spread of the virus. As a result, McDonald’s didn’t offer up any forecast for its future performance. 

Shares of the company fell more than 2% in premarket trading.

“Our strong drive-thru presence and the investments we’ve made in delivery and digital over the past few years have served us well through these uncertain times,” CEO Chris Kempczinski said in a statement. “We saw continued improvement in our results throughout the second quarter as markets reopened around the world.”

Still, McDonald’s said that it expects to accelerate U.S. restaurant closures this year and permanently shutter about 200 locations. More than half of those are lower sales volume locations inside Walmart stores. The company is forecasting 350 net new locations in 2020.

Here’s what the company reported for the quarter ended June 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 66 cents, adjusted, vs. 74 cents expected
  • Revenue: $3.77 billion vs. $3.68 billion expected

The fast-food chain reported second-quarter net income of $483.8 million, or 65 cents per share, down from $1.52 billion, or $1.97 per share, a year earlier. Expenses related to the coronavirus, including $200 million on marketing support in the U.S. and international operated markets, hurt profits. 

Excluding items, McDonald’s earned 66 cents per share, missing the 74 cents per share expected by analysts surveyed by Refinitiv.

Although it was McDonald’s largest miss in more than three decades, the estimates covered a wide range from 50 cents per share to $1.27 per share. The coronavirus pandemic has made earnings difficult to forecast. 

Net sales dropped 30% to $3.77 billion, topping expectations of $3.68 billion. Global same-store sales declined by 23.9%.

Sequentially, the company’s global same-store sales improved. In its home market, same-store sales shrank by 19.2% in April but were down just 2.3% by June. About 2,000 of its U.S. restaurants have reopened their dining rooms, but the company halted those reopenings in early July as coronavirus cases surged again.

Outside of the U.S., restaurant closures hampered sales, but 94% of locations had reopened to partial operations by the end of the quarter. Its international operated markets segment, which includes France and the United Kingdom, saw its same-store sales slashed by two-thirds in April. By June, the unit’s same-store sales declined 18.4%. 

In the international developmental licensed markets segment, which includes China and Brazil, same-store sales fell 32.3% in April, 20% in May and 20.3% in June. One bright spot was Japan, which reported same-store sales growth for the quarter.

McDonald’s includes locations that were temporarily shuttered in its same-store sales calculations.

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