McDonald’s Corp.’s stock fell 1.3% in premarket trading on Monday after the fast-food giant missed Wall Street analysts’ estimates for revenue and same-store sales, while citing an impact from war in the Middle East.
The global fast-food giant said it expects “macro challenges” to persist in 2024.
McDonald’s MCD, -0.35%
said its fourth-quarter net income rose by 7% to $2.04 billion, or $2.80 a share, from $1.9 billion, or $2.59 a share, in the year-ago quarter.
McDonald’s said the latest quarter’s results included 15 cents a share in one-time charges.
Breaking those charges out, McDonald’s would have earned $1.95 a share. Analysts expected McDonalds to earn $1.83 a share, according to FactSet data.
Revenue rose 8% to $6.41 billion, short of the FactSet consensus estimate of $6.45 billion.
Fourth-quarter global comparable-store sales increased by 3.4%, including a 4.3% rise in the U.S.. Analysts expected same-store sales growth of 4.7%.
McDonald’s said its comparable sales fell in the Middle East as a reflection of war in the region since Oct. 7.
All other same-stores sales rose in international developmental licensed markets.
Total international developmental licensed markets same-store sales rose by 0.7%, well below the result in the previous quarter, which saw a 10.5% increase.
Looking back at the balance of 2023, McDonald’s said its net income rose by 37% to $8.47 billion.
Revenue jumped by 10% in 2023 to $25.49 billion.
Free cash flow for 2023 increased to $7.25 billion from $5.49 billion.
Before Monday’s moves, McDonald’s stock was up by 10.9% in the past year.
Domino’s Pizza Group said it backed its fiscal 2023 guidance expecting accelerating growth through additional opportunities mostly in the U.K. and Ireland markets.
The pizza chain–the holder of the master franchise agreement to own, operate and franchise Domino’s stores in the U.K. and Ireland–said that it expects underlying earnings before interest, taxes, depreciation and amortization to be in the range of 132 million pounds ($165.6 million) to GBP138 million.
The company added that it still expects to open at least 60 new stores this year.
“Material progress has been made in recent years but there are a number of areas where we can significantly enhance growth,” Chief Executive Officer Andrew Rennie said.
Krispy Kreme has already run into trouble with the deputy mayor of Paris after opening its first store in the French capital this week.
The opening saw hundreds of Parisians flock to Krispy Kreme’s DNUT, +0.31%
new shop, which occupies a site that previously housed a restaurant run by Michelin-starred chef Alain Ducasse.
The North Carolina doughnut purveyor’s arrival in Paris, however, also attracted the ire of Deputy Mayor Emmanuel Grégoire, after the business put up a series of posters on the streets of Paris.
The Socialist Party politician slammed Krispy Kreme’s poster campaign for “littering the streets,” which he described as “illegal, polluting and costly for the community.” The so-called guerrilla marketing tactic of flyposting is illegal under French law.
“Prepare to get a big fine!” Grégoire said in response to a tweet celebrating the campaign that read: “Prepare to change your diet with @KrispyKremeFrr.”
The poster campaign was developed by advertising agency Buzzman Time, which has previously designed marketing campaigns for Burger King and Uber Eats.
The opening of Krispy Kreme’s Paris store marks the company’s first foray into France, which is now the second-biggest fast-food market in the world.
The New York–listed company, which was founded in 1937, plans to build 500 doughnut stalls across France over the next five years. Krispy Kreme doughnuts are currently available in 38 countries, including Cambodia, Myanmar and Kazakhstan. Its 379 locations in the U.S. are in 41 states and the District of Columbia.
According to its most recent financial results, Krispy Kreme generated $407 million in revenue in the third quarter of 2023, a 7.9% increase over the previous year.
Krispy Kreme and Buzzman Time have not responded to a request by MarketWatch for comment.
Luckin Coffee has surpassed Starbucks as China’s biggest coffee chain by sales and units, company reports show, a comeback for the Chinese company after an accounting scandal that stalled its growth.
Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp. SCHW, +1.64%,
made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.
But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.
Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:
Real-estate advice from the Moneyist
MarketWatch illustration
Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:
Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.
The U.S. Treasury yield curve has been inverted for nearly a year.
FactSet
Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills BX:TMUBMUSD03M
having higher yields than 10-year Treasury notes BX:TMUBMUSD10Y.
There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.
As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.
In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.
For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.
Ford’s good news — in the bond market
Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.
By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500 SPX
: Apple Inc. AAPL, -0.52%,
Microsoft Corp. MSFT, +1.29%,
Amazon.com Inc. AMZN, +0.38%,
Nvidia Corp. NVDA, +3.45%,
Alphabet Inc. GOOGL, +1.26%
GOOG, +1.39%,
Meta Platforms Inc. META, +1.20%
and Tesla Inc. TSLA, +0.66%.
With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust SPY,
which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:
Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.
After the market close on Wednesday, PayPal Holdings Inc. PYPL, +1.89%
announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.
Consumers drive mixed reactions to earnings results
Apple Inc. reported mixed quarterly results.
Mario Tama/Getty Images
Here’s more of the latest corporate financial results and reactions. First the good news:
And now the news that may not be so good:
Harsh verdict for SBF
FTX founder Sam Bankman-Fried.
AP
It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.
Here’s more reaction and coverage of the virtual-currency industry:
Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.
McDonald’s MCD, +0.27%
is planning to bring back its beloved McRib sandwich, just one year after giving the porky treat a “farewell tour.” The menu item is set to return next month, according to the company.
“While it won’t be available nationwide, some lucky fans may find their favorite elusive saucy sandwich at their local McDonald’s restaurants this November,” McDonald’s said in a statement to MarketWatch on Wednesday.
Not that the news should come as a complete surprise. McDonald’s has always employed a scarcity tactic in marketing the McRib. That is, the key to the sandwich’s appeal has been that it’s never around for long, leaving fans (including Homer Simpson) to devour it while they can.
As Restaurant Business, a trade publication, observed last year: “If consumers think there is a shortage of a product, or that it won’t be around for long, they will rush out to get it. Think of the Great Toilet Paper Shortage in 2020 and how many people rushed out to get some the moment they thought they might run out.”
The publication quoted McDonald’s CEO Chris Kempczinski about this approach, particularly in relation to the “farewell tour”: “The McRib is the GOAT of sandwiches on our menu. And so like the GOATs Michael Jordan, Tom Brady, and others, you’re never sure if they’re fully retired or not.”
By all accounts, the strategy has worked: A Wall Street Journal story once noted that McDonald’s sold more than 60 million of the sandwiches over a three-year period — in spite of the fact (or maybe because of the fact) it’s available in such limited fashion.
Further proof of the McRib’s success: It has spawned some competition. In 2021, Arby’s released a Country Style Pork Rib sandwich as a limited-time fall offering — and took cheeky aim at McDonald’s in its marketing, referring to the McRib as a “rib-shaped sandwich” (there’s some truth to that — the McRib features a boneless pork patty with no actual ribs).
Naturally, the McRib’s return has sparked plenty of reaction on social media. One commenter on X (formerly Twitter) referred to the fact the sandwich seemingly has nine lives. Another said that McDonald’s retracting of its “farewell tour” announcement has left them having “trust issues.”
Starbucks Corp. on Wednesday said former Chief Executive Howard Schultz is stepping down from its board of directors, capping a nearly 40-year career during which the company grew from a handful of stores in Seattle into a global coffee chain.
Schultz’s retirement from the board, which ends his involvement in the company’s leadership, took effect Wednesday and was part of a planned transition, the coffee chain said. Schultz stepped down as Starbucks SBUX, +0.72%
chief executive in March.
The company on Wednesday also said that it had elected Wei Zhang to its board of directors, effective Oct. 1. Zhang was most recently a senior adviser to Chinese e-commerce giant Alibaba Group BABA, -0.75%
and also held leadership positions at News Corp China and CNBC China.
Shares of Starbucks were down 0.7% after hours on Wednesday.
Starbucks said Schultz “will now turn his attention with his wife, Sheri, to focus on a range of philanthropic and entrepreneurial investments to create greater opportunity, accessible to all.” The company noted that the two were co-founders of the Schultz Family Foundation in 1996, and of the emes project.
Although he was not technically the founder of the coffee chain, Schultz became the modern face of it. Schultz joined Starbucks in 1982 as its director of operations and marketing. After a brief hiatus from the company, he returned in 1987 as chief executive and bought the business with backing from local investors, according to a biography on the Starbucks website. The chain went public in 1992.
As the chain’s footprint expanded beyond the U.S., Schultz stepped down from the CEO role in 2000 but returned in 2008. He retired from Starbucks in 2018, then came back as interim chief executive and board member last year.
Over those years, Starbucks has banked on China for international growth — even as that country’s economy remains turbulent following the postpandemic reopening. It also added food and cold and customizable drinks to its menus and built out its mobile-ordering infrastructure.
The company has branded itself as a progressive employer and a supporter of social justice. But over the past two years, the company, and Schultz in particular, have faced criticism over the handling of employees who were trying to unionize. Union members have accused the chain of unfair labor practices, retaliation for organizing and delaying contract negotiations, leading to deeper scrutiny from lawmakers.
“We hope this is an opportunity for Starbucks to change course and leave their union-busting behind them,” Starbucks Workers United, the union representing those workers, said Wednesday in a tweet.
Still, even as inflation has eaten into consumer savings, Schultz said coffee has remained an “affordable luxury” for many customers. And Starbucks management said that younger, loyal consumers and customizable drinks would help sustain demand.
According to a filing on Wednesday, Schultz will still be connected to the company in other ways. Starbucks said it would amend Schultz’s retirement agreement from 2018 and continue to provide him and his spouse with security services.
“The security services will be provided for a period of 10 years and will be evaluated on an annual basis,” the filing said. “In recognition of Mr. Schultz’s leadership as the company’s founder and chairman emeritus, the company will also provide Mr. Schultz with the reimbursement of his monthly healthcare insurance premiums.”
Starbucks’ annual launch of its fall-themed Pumpkin Spice Latte sparked a spike in visits to the coffee giant, according to foot-traffic data from analytics company Placer.ai.
The Pumpkin Spice Latte, or PSL, made its return with the launch of Starbucks’ SBUX, +0.19%
fall menu on Aug. 24, marking the 20th year that the company has offered the beverage. “Starbucks excels in driving traffic to its venues during otherwise unremarkable times through recurring seasonal menus and special promotions,” wrote Placer.ai’s Head of Content Shira Petrack, in a blog post, citing the company’s “WinsDays” promotion that offered Starbucks Rewards members 50% off cold drinks ordered through the company’s app on certain Wednesdays in July and August.
“The promotion drove traffic to the chain during the typical midweek lull and may have gotten visitors excited about the main event later in the month — the return of the Pumpkin Spice Latte,” Petrack added. “So when the fall-themed drink hit Starbucks stores on Thursday August 24th, visits spiked once more.”
Petrack explained that visits to Starbucks on the Pumpkin Spice Latte launch day had been on a steady upward trend in the years leading up to the pandemic before, understandably, falling significantly in 2020. “And while the foot traffic trends improved in 2021 and 2022, Starbucks visits on the day of the PSL’s return still remained below 2018-2019 levels,” she wrote. However, this year’s fall menu rollout drove a 25.1% increase in visits on launch day, compared to 2017’s PSL drop day, marking the largest spike in recent years.
Placer.ai also noted that on the Saturday after this year’s Pumpkin Spice Latte launch, Starbucks visits surged by 41.1%, compared with the 29.5% increase on the Saturday following the 2022 PSL launch.
“During a period when budgets are still tight and consumer confidence is shaky, the option to splurge on an affordable treat and indulge in the comfort and nostalgia of the fall flavors may seem particularly attractive,” Petrack wrote.
Starbucks also launched two new seasonal beverages on Aug. 24: the Iced Apple Crisp Oatmilk Shaken Espresso and Iced Pumpkin Cream Chai Tea Latte. It also introduced a new Baked Apple Croissant.
The company’s stock has risen 7.7% this year, compared with the S&P 500 index’s SPX
gain of 9.9%.
Of course, Starbucks is not the only company tapping into the pumpkin-spice craze. Dunkin’ Donuts brought back its Pumpkin Spice Signature Latte on Aug. 16, a full week before Starbucks dropped its PSL.
Further evidence of pumpkin spice mania came last month when Anheuser-Busch InBev’s Busch Beer released Pumpkin Spice Dog Brew. The non-alcoholic dog treat is made with vegetables, spices and water.
According to market researcher NielsenIQ, sales of pumpkin-flavored retail products were $803 million for the 52-week period ending in late July 2023, an increase of almost 15% on the prior 52-week period. However, unit sales, or the actual number of pumpkin-flavored products purchased, declined 1.5% for the 52-week period ending in late July.
Shares of Starbucks Corp. fell after hours Tuesday after the coffee chain reported third-quarter same-store sales that missed expectations, despite a big rebound in China.
The coffee chain reported fiscal third-quarter net income of $1.14 billion, or 99 cents a share, compared with $912.9 million, or 79 cents a share, in the same quarter last year. Adjusted for restructuring and impairment costs, Starbucks earned $1 a share.
Revenue rose 12.5% to $9.17 billion, compared with $8.15 billion in the prior-year quarter. Same-store sales rose 10% worldwide, with a 7% gain in North America. Those same-store sales jumped 24% internationally, with a 46% gain in China.
Analysts polled by FactSet expected Starbucks SBUX, -0.31%
to report adjusted earnings per share of 95 cents, on revenue of $9.29 billion and same-store sales growth of 11%.
Operating margins rose to 17.3%, from 15.9% a year ago, with higher prices and productivity offset by greater spending on employee wages and benefits.
Shares slipped 1.2% after hours on Tuesday. Shares of Starbucks are roughly where they were at the beginning of the year.
Starbucks executives over the past year have said that amid stubborn inflation, customers see coffee as an affordable luxury worth treating themselves to. But Wall Street has struggled to find a reason to push the stock higher amid questions about trends in North America and slowing same-store sales in the years ahead, as well as China’s uneven economic recovery as it shakes off pandemic restrictions.
UBS analysts said that demand in the U.S. was likely still “solid.” But they said that the focus would be on demand in China. Quo Vadis analyst John Zolidis, meanwhile, said that along with China, investors had been focused on the chain’s efforts to set up more drive-through locations in the U.S., and any benefits from higher-priced cold drinks and customizable orders.
The coffee chain also continues to fight with its unionized employees. Bargaining has stalled. Last month, unionized workers accused Starbucks of banning Pride-themed decorations. Starbucks aggressively denied those allegations.
Mediterranean fast-casual restaurant chain Cava Group on Wednesday priced its initial public offering of 14.4 million shares at $22 a share, up from a prior range, giving the company a valuation of roughly $2.45 billion.
Shares are expected to begin trading Thursday on the New York Stock Exchange with the ticker symbol CAVA.
It may not have been a surprise to see the consumer discretionary sector of the S&P 500 get hammered last year amid talk of a looming recession while the Federal Reserve jacked up interest rates to push back against inflation.
But the stock market always looks ahead. Following a decline of 19.4% for the S&P 500 SPX, +0.42%
in 2022 and a 37.6% drop for the benchmark index’s consumer discretionary sector, this may be the time to begin looking for bargains.
And now, analysts at Jefferies have lifted the sector to a “bullish” rating.
In a note to clients on Jan. 10, Jefferies’ global equity strategist, Sean Darby, wrote: “A Goldilocks scenario might be unfolding for the U.S. consumer — falling inflation but steady employment conditions.”
He sees consumer confidence improving, in part because “households are still sitting on [about] $1.4 trillion of Covid savings.”
Darby pointed to a list of 18 consumer discretionary stocks favored by Jefferies analysts that was published on Jan. 6. Those are listed below, along with three stocks in the sector the analysts rate “underperform.”
The ratings of the Jefferies analysts for individual stocks is based on their 12-month outlooks for the companies, in keeping with Wall Street tradition.
So we have added another list further down, showing which companies in the S&P 500 consumer discretionary sector are expected by analysts polled by FactSet to increase sales the most through 2024.
The Jefferies 18
Here are the 18 consumer discretionary stocks recommended by Jefferies analysts with “buy” ratings on Jan. 6, sorted by how much upside the firm sees for the shares from closing prices on Jan. 9:
Click on the tickers for more information about the companies.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
The two right-most columns on the table show estimated compound annual growth rates (CAGR) for the companies over the past three calendar years and expected sales CAGR for two years through calendar 2024, based on the companies’ financial reports and consensus estimates among analysts polled by FactSet.
(We used calendar-year numbers, some of which are estimated by FactSet for prior years, because some companies have fiscal years or even months that don’t match the calendar.)
The stock pick with the highest 12-month upside potential, based on Jefferies’ price target, is Topgolf Callaway Brands Corp. MODG, -0.22%.
This company has the highest estimated three-year sales CAGR on the list, and has the third-highest projected sales CAGR through 2024, after Planet Fitness Inc. PLNT, +0.69%
and Chewy Inc. CHWY, +1.63%.
On Jan. 6, the Jefferies analysts also listed three stocks in the sector they rated “underperform.” Here they are, sorted by how much the analysts expect the stocks to decline over the next 12 months:
A look head at which companies are expected to increase sales the most over the next two years might serve as a good starting point for your own research.
Bear in mind that some of the companies in travel-related industries suffered declining sales for three years through 2022 because of the coronavirus pandemic. Some of those are on this new list of 20 stocks in the S&P 500 consumer discretionary sector expected to show the highest two-year sales CAGR through calendar 2024:
Among the companies on this list that didn’t suffer sales declines from 2019 levels, Tesla Inc. TSLA, -1.83%
is expected to achieve the highest two-year sales CAGR through 2022.
Dollar General Corp. DG, -0.26%
is the only company to appear on this list based on consensus sales growth estimates and the Jefferies recommended list.
The Securities and Exchange Commission said Monday it has filed charges against Stephen J. Easterbrook, former chief executive of McDonald’s Corp., for making “false and misleading” statements to investors about the circumstances that led to his ouster in November 2019.
The agency has also filed charges against McDonald’s for “shortcomings” in its public disclosures relating to Easterbrook’s severance agreement.
McDonald’s MCD, -0.55%
fired Easterbrook for exercising poor judgment and violating company policy by engaging in an inappropriate personal relationship with a McDonald’s employee. However, the separation agreement struck with the executive concluded that his termination was without cause, allowing him to retain substantial equity compensation that would have been forfeited in other circumstances.
“In making this conclusion, McDonald’s exercised discretion that was not disclosed to investors,” the SEC said in a statement.
In July 2020, McDonald’s discovered in an internal probe that Easterbrook had engaged in other, undisclosed relationships with employees. Those findings were not disclosed prior to Easterbrook’s termination, in the knowledge that they would influence the board’s decision making, according to the SEC.
“When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives,” said Gurbir S. Grewal, the SEC’s director of the division of enforcement.
The SEC is charging Easterbrook with violating anti-fraud provisions of the SEC Securities Act of 1933 and the Securities Exchange Act of 1934. Easterbrook has consented to a cease-and-desist order and five-year officer and director bar and a $400,000 civil penalty, without admitting to or denying the charges.
McDonald’s is charged with violating section 14(a) of the Exchange Act and Exchange Act Rule 14a-3. The fast-food giant has consented to a cease-and-desist order, without admitting to or denying SEC findings. The SEC has opted not to fine the company, as it cooperated with the agency and clawed back compensation after its probe.
The stock was slightly lower Monday in early trades.
Ever since Starbucks Corp. rolled out longer-term financial targets in September, Wall Street has wondered how the coffee chain might meet what analysts say were ambitious goals, as rising prices drain consumer spending. For at least the year ahead, executives on Thursday called out three ways to get there: higher prices, younger customers and cold, customizable beverages.
For the fiscal year ahead, executives for the coffee chain on Thursday said they expected global same-store sales to be “near the high end” of its long-term target of between 7% to 9% growth. FactSet expects growth of 8.6%.
When an analyst asked what gave management confidence in that target, interim Chief Executive Howard Schultz said that its coffee was an “affordable luxury,” and that it was armed with a loyalty program that it didn’t have in years past. And they said its customers were getting younger, not older.
“Not only has it gotten younger, but that young, Gen Z customer tends to have significantly more discretionary money at their disposal,” he said. “And their loyalty to Starbucks has been quite significant and predicted.”
He said Starbucks SBUX, +0.12%
had raised prices by nearly 6% over the past 12 months and hadn’t seen demand subside. And he said cold coffee beverages made up 76% percent of total drink sales in its U.S. company-owned stores. In the fourth quarter, more than half of beverages overall in those stores were customized, leading to $1 billion in sales a year for add-on syrups, foams and other ingredients.
“I think customization, which we spoke a lot about in our prepared remarks, is obviously giving us the ticket is becoming more accretive,” he said.
Management said they expect U.S. same-store sales growth of 7% to 9% for the year ahead. For China, they’re banking on “outsize” growth for the metric — interrupted by a decrease in the first-quarter — as the nation potentially emerges from pandemic-related lockdowns.
For overall revenue, they expect gains of between 10% and 12%. Management also said they would resume their buyback program in fiscal 2023.
Even as the Federal Reserve tries to chart a path to lower prices, Starbucks is the latest company to say it still has “pricing power,” or the ability to charge customers more. Snack maker Mondelez International MDLZ, -0.93%,
earlier in the week, said it planned to raise prices through next year. Similarly, its own chief executive also described its snacks as an “affordable indulgence.”
Prior to the call, Starbucks reported fiscal fourth-quarter results that beat expectations, helped by a boost in U.S. sales and higher prices.
The coffee chain reported net income of $878 million, or 76 cents a share, compared with $1.76 billion, or $1.49 a share, in the same quarter last year. Revenue rose 3% to $8.4 billion, compared with $8.15 billion in the prior-year quarter.
Same-store sales rose 7% worldwide, helped largely by bigger ticket sizes, even as actual transaction volume remained muted. They were up 11% in the U.S. But international same-store sales fell 5%, with a 16% drop in China.
Excluding restructuring, impairment and other costs, Starbucks earned 81 cents per share, compared with 99 cents a year earlier. U.S. members of its loyalty program who were active for three months rose 16% to 28.7 million.
Analysts polled by FactSet expected Starbucks to report adjusted earnings per share of 72 cents, on revenue of $8.323 billion. Same-store sales were expected to rise 4.2%.
Shares rose 2.4% after hours.
As with other restaurants and retailers, Starbucks’ sales this year have been helped by price increases. Analysts have also said higher-income consumers, who might not mind higher prices as much, as well as demand for cold beverages, have propelled demand. While China’s COVID-19 restrictions have weighed on sales, analysts say demand trends are strong elsewhere.
“The U.S. business is humming, and the China risk is increasingly understood,” Wedbush analyst Nick Setyan wrote in a research note ahead of Starbucks’ earnings.
The earnings report comes as Starbucks battles a nascent unionization push at some of its stores. Some bargaining efforts between the company and the union members have stalled, amid allegations from both of bad-faith negotiations. The company over the past year has spent more to raise employee pay and rolled out other incentives at non-union stores.
Starbucks stock has tumbled 27% so far this year. The S&P 500 Index SPX, -1.06%,
by comparison, is down around 22%.
When it comes to nostalgia, McDonald’s customers sure are lovin’ it.
The burger chain brought back its Halloween pails on Tuesday, which haven’t been offered in the U.S. since 2016. The plastic trick-or-treat buckets decorated to look like a ghost, a goblin or a jack-o’-lantern (aka McBoo, McGoblin and McPunk’n, respectively) quickly began trending among real-time Google searches on Tuesday.
But the appetite for these Halloween buckets is nothing compared to the recent McDonald’s MCD, +1.10%
collaboration with streetwear company Cactus Plant Flea Market, which dished out a $12-$13 box (better known as the “adult Happy Meal”) that featured a food combo and a collectible figurine targeted toward the grownups who grew up on Happy Meals.
They sold out quickly, and now some enterprising fast food lovers are hawking the adult Happy Meal toys over online resale sites for thousands of dollars.
So what’s the appeal? Nostalgia, nostalgia, nostalgia. “Everyone remembers their first Happy Meal as a kid … and the can’t-sit-still feeling as you dug in to see what was inside,” McDonald’s wrote in a press release. “And now, we’re reimagining that experience in a whole new way — this time, for adults.”
The limited-edition Cactus Plant Flea Market Box at McDonald’s rolled out on Oct. 3, feeding the inner child of the average customer by offering a choice of a Big Mac or 10-piece chicken nuggets main dish, french fries and a soft drink, as well as one of four “toys” featuring redesigned McDonald’s mascots like the Grimace, the Hamburgler and Birdie, as well as a new “Cactus Buddy!” figure (yes, the exclamation point is part of his name.)
The Cactus Plant Flea Market boxes sold out in many places on the same day that they came out. Some McDonald’s employees took to Reddit and TikTok to share how much they were not lovin’ it — which was reminiscent of the hatred many Starbucks SBUX, +0.07%
employees felt toward the viral unicorn frappuccino in 2017.
And now, both the toys and the boxes have become near impossible to come by — unless you’re willing to cough up a lot of cash. A medium Cactus Plant Flea Market Box costs about $12, with large box closer to $13 — and one New Jersey mom noted that in her area, a Big Mac combo with fries and a drink runs under $10, so she spent $3 basically get the collectible toy.
But one eBay listing offering three of the collectible Cactus Plant Flea Market, still unwrapped and in their original packaging, is asking for a whopping $300,000.
The sold-out Cactus Plant Flea Market Boxes, aka McDonald’s “adult Happy Meals,” are popping up on resale sites for thousands of dollars.
The sold-out Cactus Plant Flea Market Boxes, aka McDonald’s “adult Happy Meals,” are popping up on resale sites for thousands of dollars.
Screenshot
But there are dozens of other listings for the individual toys and boxes on resale sites such as eBay and Facebook Marketplace in the much more palatable $10-$30 range, or bundles with all four collectible figurines running between $60-$70.
McDonald’s was not immediately available for comment, but a rep told Axios that, “The hype for the Cactus Plant Flea Market Box was so real that some of our restaurants have sold out of the limited-edition experience.” They added that, “We’re thrilled by the excitement we’re seeing.”
The official McDonald’s Twitter account has also been fielding queries from disappointed potential customers who haven’t been able to get their hands on any of the adult Happy Meals, apologizing that this was only a limited time offer.
Time will tell if more “adult Happy Meals” will be offered in the future. There’s clearly a customer base hungry for more.
This isn’t McDonald’s first viral sensation, of course. The fast food giant has also scored success with celebrity collaborations featuring K-Pop sensation BTS, or singing diva Mariah Carey — which also reportedly sold out.
