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Cars line up at KFC (Kentucky Fried Chicken) in Bloomsburg.
Paul Weaver | Light Rocket | Getty Images
Yum Brands Wednesday mentioned Quarterly earnings fell short of analysts’ expectations, despite rebounds in China sales at KFC and Pizza Hut.
Yum joins the growing list of companies that include Procter & Gamble And Starbucks which reported a recovery in sales in China.
The company’s shares closed down 3.9% on Wednesday.
Here’s what the company reported for the first quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by Refinitiv:
- Earnings per share: $1.06 adjusted vs. $1.13 expected
- Revenue: $1.65 billion vs. $1.62 billion expected
Yum reported net income of $300 million, or $1.05 per share, down from $399 million, or $1.36 per share, a year earlier. The company said its earnings fell by 7 cents per share due to the decline in the value of unnamed investments, and an 8 percent stake was affected by foreign currency.
Excluding items, the restaurant company earned $1.06 per share.
Net sales It rose 6% to $1.65 billion. Same-store sales increased 8% in the quarter as its three largest chains beat expectations. CEO David Gibbs said in the company’s earnings release that digital sales exceeded 45% of transactions.
Executives credited lower-income consumers with helping to increase sales during the quarter. Deals like Taco Bell’s $2 and under value menu, KFC’s Two for $5, and Pizza Hut’s $6.99 have helped attract diners who would otherwise hold back on their restaurant’s spending.
Yum’s chief financial officer, Chris Turner, said on a conference call with analysts that inflation, staffing challenges and supply chain disruptions have eased in the United States, making it easier for the company and its franchisees to operate restaurants. But he added that some global markets are still suffering from inflation.
KFC’s same-store sales were up 9%, thanks to its international markets. In China, KFC’s largest market, system sales jumped 17%, helping to fuel the chain’s international store sales growth of 11%.
Similarly, Pizza Hut reported that Chinese order sales rose 24% in the quarter. The country is Pizza Hut’s second largest market, after only the United States
The pizza chain also did well in the US, reporting same-store sales growth of 8%. Overall, Pizza Hut store sales were up 7%.
Taco Bell reported same-store sales growth of 8% for the quarter. Among Yum’s portfolio, Taco Bell saw the largest increase in openings as the chain focused on expanding its international presence.
China has become Taco Bell’s fourth international market with at least 100 locations. Spain, the United Kingdom and India have already crossed that threshold.
Yum opened 746 new locations across all of its chains during the quarter.
Shortly after the quarter ended, Yum completed its exit from Russia by selling these KFC restaurants to Smart Service, a Russian-based franchise. The company had already sold its Pizza Hut locations there to a local operator last summer, after Moscow invaded Ukraine.
Next quarter, Yum won’t face any comparisons involving its Russia business because the company suspended operations there in early March of last year.
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