Wu Yu, reporter of China Fund News

The impact of the epidemic on the US economy has been profound, evenMcDonaldNor can it hold up anymore.

Recently, McDonald's second quarter report was released. In the second quarter, McDonald's total sales fell 30% year on year, and net revenue plummeted 68% to 480 million US dollars. At the same time, McDonald's announced that it will close 200 branches in the US and also sell shares in part of the Japanese business.

McDonald's performance declined sharply in the second quarter

Under the pandemic, although McDonald's performance declined in line with market expectations, the decline exceeded market expectations.

On July 29, McDonald's released its financial report for the second quarter of 2020. Financial reports show that McDonald's revenue for the second quarter was US$3.761.5 billion, down 30% year on year; net profit was US$483.8 million, down 68% year on year; this slightly exceeded market expectations.

According to Bloomberg tracking data, this is the worst performance since 2005.

McDonald's said its quarterly revenue fell by nearly one-third as coronavirus lockdown measures dragged down sales of its fries and cheeseburgers. As of June 30, 2020, nearly all McDonald's restaurants around the world are open for business. Q2 Global same-store sales fell 23.9%, with US same-store sales falling 8.7%.

In the international market segment, which includes France and the United Kingdom, same-store sales fell by two-thirds in April. By June, the division's same-store sales were down 18.4%.

In the international development licensing market, which includes China and Brazil, same-store sales fell 32.3% in April, 20% in May, and 20.3% in June.

The positive sign, however, is that 96% of McDonald's restaurants worldwide have reopened in June, a significant increase from 75% in April. McDonald's CEO Chris Kempczinski (Chris Kempczinski) said on his earnings call: “The public health situation appears to be worsening in many markets around the world, particularly in the US.” “Despite this, I believe the second quarter represented a slump in our performance as McDonald's has learned to adapt our operations to the new environment.”

But at the same time, he said that the epidemic is worsening in many parts of the world, especially in the US. Recently, McDonald's business has been boosted by additional unemployment benefits of 600 US dollars per week. The company expects that if payments are stopped or reduced, it will have a “negative impact.”

As a result, there is still great uncertainty about the future.

Plans to close 200 US stores

Next, in order to improve profitability, McDonald's will accelerate the implementation of store closure plans in the US market. McDonald's announced that it plans to close about 200 US stores this year. Of these, more than half are inWalmart supermarketStores with declining internal revenue.

However, over a longer period of time, the number of McDonald's stores in the US has been reduced year by year. In 2014, McDonald's stores in the US peaked at 14,350 and then began to decline; according to the company's second-quarter earnings report, McDonald's currently operates 13,835 restaurants.

Announced the sale of shares in part of the Japanese business

Additionally, McDonald's also announced plans to sell some of its shares in the Japanese business and reduce its ownership in Japan from around 49% to at least 35%.

Chris Kempchinski said the move was aimed at helping the company gain greater “financial flexibility” as it wants to save cash and maintain its liquidity throughout the pandemic.

Japan has been the highlight of McDonald's in recent years. Chris Kempchinski said same-store sales in the region increased in the second quarter, partly due to the brand's reputation for cleanliness and convenience among Japanese customers.

Market capitalization evaporated by 26 billion

After the results came out, McDonald's stock price fell nearly 2.5% on Tuesday, and the market value evaporated by 3.7 billion US dollars (nearly 26 billion yuan) in two days.

More than 3,600 US companies have filed for bankruptcy this year

The impact of the pandemic on the US economy has been profound. Thousands of businesses have gone bankrupt, and a large number of people have lost their jobs. Currently, the US Republican Party has proposed a new round of economic stimulus plans with a total scale of about 1 trillion US dollars. However, market participants worry that this will not be enough to change the bleak outlook for the US retail industry in the second half of the year.

According to data recently released by Ebay, the world's leading legal services company, as of June 30, more than 3,600 US companies have filed for bankruptcy protection this year, an increase of 26% over the previous year.

Global chain car rental brandHz, an established shale oil and gas companyChesapeake EnergyCompanies such as the century-old clothing brand Booker Brothers have declared bankruptcy one after another.

At the same time that McDonald's released its financial report,Victoria's SecretL Brands, the parent company, sent an early warning signal, predicting a 20% drop in revenue for the second quarter. Among its major brands, Victoria's Secret sales are expected to drop 40%. L Brands has previously announced that it will close 250 Vimi stores this year. In order to further cut expenses, they also announced a layoff plan on Tuesday local time. They plan to cut 850 employees, accounting for 15% of the total number of employees.

Oliver Chen, senior US stock research analyst: We expect the number of US shopping malls to be reduced by 40%. It is obvious that some retailers will go bankrupt or fall into liquidity difficulties, but some retailers that can survive will get the chance to increase their market share.

However, this is just the tip of the iceberg. There are also a large number of self-employed households or family workshops that have silently closed their doors and are difficult to count. They are the most direct “victims” of the epidemic. These merchants are scattered all over the US. Their collapse usually does not attract much attention, but it has truly hurt families and individuals, highlighting the overall damage caused by the pandemic to the US economy.

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