— This is the script of CNBC's news report for China's CCTV on July 29, 2020, Wednesday.
The whole restaurant industry has suffered a great loss due to the epidemic. Mc Donald's, the world's largest fast-food chain, its decline was expected by the market, but its overall performance is still disappointing. According to Mc Donald's latest financial report,
Revenue in the second quarter fell 30% from a year earlier to $3.77 billion, which is over-expected; global store sales fell by nearly 24% (23.9%), which is the worst performance since 2005, according to tracking data from Bloomberg; Excluding one-time items, McDonald's earnings per share fell 68 per cent, the gap with market expectations is the widest in 30 years. On the positive side, 96 percent of McDonald's restaurants around the world reopened in June, up from 75 percent in April. But McDonald's CEO warned that the epidemic is likely to worsen in many parts of the world, especially the United States, as a result, the future is still more uncertain, McDonald's did not publicly announce the next earnings forecast.
McDonald's had already announced spending cuts and suspended its share buyback program in March after the outbreak. They also spent $200 million to help franchisees advertise their restaurants in an attempt to boost sales, according to the latest release. To improve earnings, McDonald's will accelerate store closures in the US next.
Its goal is to close about 200 U.S. stores this year. Of those, more than half are the stores that locate in Walmart and have a declined revenue.
While McDonald's released its earnings report, Victoria's Secret parent company L Brands issued a warning signal, predicting a 20% decrease in revenue in the second quarter.
Among its major brands, Victoria's Secret sales are expected to decline by 40%. L Brands has previously announced that it will close 250 Victoria's Secret stores this year. In order to further reduce expenses, they announced a layoff plan on Tuesday local time. They plan to cut 850 employees, accounting for 15% of the total number of employees.
News of retail closures, lay-offs and even bankruptcies is rife. In recent days, Republicans have proposed a new $1 trillion economic stimulus package. However, market analysts tell us that this is not enough to change the bleak outlook for the retail sector in the second half of the year.
Oliver Chen
managing director/senior equity research analyst in Cowen Inc
REPORTER: Is that not enough to you think to keep the retail sector from having a worse back half of the year？
Answer: yes， savings rate could be a helpful driver. The stimulus has a non-recurring benefit of about five to six percentage points in May and June. So that this doesn't happen. That will be a caution point
We are expecting malls to contract by 40 percent to 600, so some retailers are clearly going bankrupt and liquidation, but other players who are still here have an opportunity to gain market share.
We will continue to pay close attention to the development of the retail industry in the context of the epidemic