McDonald's Corp (NYSE:MCD) shares rose on Tuesday after it said both higher prices and value items fueled higher than expected US same-store sales growth in the second quarter of 2022.
However, the company's president and chief executive officer Chris Kempczinski noted that the environment is still “challenging” as inflation and the war in Ukraine weighed on the restaurant group's overall quarterly earnings.
McDonald’s reported second-quarter net income of $1.19 billion, or $1.60 per share, down from $2.22 billion, or $2.95 per share, a year earlier, on revenue of $5.72 billion versus $5.81 billion expected.
READ: McDonald's to sell its 850 Russian restaurants to Siberian franchisee
"The McDonald's System continues to demonstrate strength and resiliency," said Kempczinski. "Our second quarter performance reflects outstanding execution against our Accelerating the Arches strategy. By focusing on our customers and crew, enabled by a rapidly growing digital capability, we delivered global comparable sales growth of nearly 10%."
"Nonetheless, the operating environment across the competitive landscape remains challenging. While we are planning for a wide range of scenarios, I am confident that our plans and people position McDonald's to weather this environment better than others," the CEO added.
The company reported a $1.2 billion charge related to the sale of its Russian business due to the war in Ukraine. Excluding that charge, a French tax settlement and other items, the fast-food giant earned $2.55 cents per share.
Net sales fell 3% to $5.72 billion, hurt in part by the closure of McDonald’s Russian and Ukrainian restaurants. Global same-store sales rose 9.7% in the quarter, fueled by strong international growth. Russian locations were excluded from the company’s same-store sales calculations, but Ukrainian restaurants were included.
But US same-store sales increased 3.7% in the quarter, topping estimates of 2.8%. The company credited strategic price hikes and its value offerings for its strong performance.
McDonald’s international operated markets segment reported same-store sales growth of 13%, fueled by strong demand in France and Germany.
In early New York trading, McDonald's shares were up 1.8% at $255.07.
Contact the author at jon.hopkins@proactiveinvestors.com