10:39 AM EDT, 04/30/2024 (MT Newswires) -- McDonald's (MCD) on Tuesday reported first-quarter results that rose year-over-year but earnings and comparable sales missed market estimates, impacted by cautious consumer spending and the Middle East war.

The fast-food heavyweight's adjusted earnings rose to $2.70 per share for the March quarter from $2.63 the year before, but trailed the Capital IQ-polled consensus of $2.73. Revenue gained 5% to $6.17 billion, in line with the Street's view.

Comparable sales on a global basis grew 1.9% versus a roughly 13% jump in the prior-year quarter, below the 2.4% increase modeled by analysts.

"It is clear that broad-based consumer pressures persist around the world," Chief Executive Chris Kempczinski said during an earnings call, according to a Capital IQ transcript. "Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending, which is putting pressure on the (quick-service restaurant) industry."

In the US, same-store sales rose by 2.5% driven by factors including price increases, marketing campaigns and digital and delivery orders. Comparable sales in international markets rose 2.7% led by the UK and Germany. Same-store sales in international developmental licensed markets dipped 0.2%, as the impact from the Israel-Gaza war more than offset gains in Japan, Latin America and Europe, according to the company.

In response to a question about the impact of war-related boycotts, Kempczinski said McDonald's isn't expecting "any meaningful improvement" on that front until the war is over. "We continue to have that outlook on what the Middle East conflict is going to do to our trends," he told analysts.

The company is facing stronger-than-expected macro headwinds heading into the current three-month period and anticipates the US to "start the quarter roughly flat from a (comparable) sales perspective," Chief Financial Officer Ian Borden said on the call. "And so I think what we're seeing is in many of our largest markets internationally and the US that the industry traffic is either flat or we're certainly seeing declining trends," according to the CFO.

"As customers continue to be more intentional with the dollars that they spend in a pressured economic landscape, we expect moderated top line growth this year," Borden said, referring to consolidated revenue. "I think four months into the year, I think what we can say is, clearly, 2024 isn't going to be a typical year for the broader industry."

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