San Francisco Frontiers - McDonald's profits hit by weakness in US market

The chain's home market of the United States saw a 3.6-percent drop in comparable sales, more than the one-percent fall globally.

"The big thing is people are just visiting less and that speaks to the pressures on consumers, consumer sentiment," Chief Financial Officer Ian Borden said in a conference call with analysts.

"The things that we've been talking about for a while now -- inflationary pressures, interest rates that are weighing obviously, particularly on lower consumers, and that's spilling over into middle-income consumers right now," he said.

Executives said there had been no drop in spending from higher-income consumers.

The company said it plans more promotions centered on its "McValue" platform, which includes limited-time $5 meal combinations featuring a sandwich, Chicken McNuggets, fries and a drink.

Profits came in at $1.9 billion, down three percent, while revenues also fell three percent to $6.0 billion.

The chain described a "mixed" performance across international businesses, flagging weakness in the United Kingdom, but a strong performance in the Middle East and Japan.

Company polling has shown the chain has not suffered due to a rise in anti-US sentiment in international markets, CEO Christopher Kempczinski said in response to an analyst question.

"We've seen an uptick in anti-American sentiment, call it, eight to 10 points increase in anti-American sentiment," Kempczinski said of company surveys that have shown the biggest negative impact in Northern Europe and Canada.

"That's had no impact on our business and consumer sentiment toward the McDonald's brands remains strong," he said.

Shares of McDonald's fell 1.3 percent in afternoon trading.

W.Carter--SFF