Yum Plunges After Sluggish Sales in China Drag Down Earnings
Yum! Brands, owner of the KFC, Pizza Hut and Taco Bell chains, tumbled as much as 19 per cent in late trading after a lingering slump in China caused the fast-food giant to miss third-quarter profit estimates.
Same-store sales rose two percent in China, the company said in a statement Tuesday. Analysts projected an increase of 9.6 per cent, according to Consensus Metrix. Earnings amounted to $1 a share in the period, excluding certain items. That missed an average estimate of $1.06.
Yum, which gets more than half its revenue from China, has been coping with the fallout from a food-supplier investigation, as well as a slowing local economy. So far, a revamped menu focusing on breakfast and healthier foods at KFC, which has about 4,900 locations in the country, hasn’t been enough to bring back consumers.
“The pace of recovery in our China division is below our expectations," Chief Executive Officer Greg Creed said in the statement. The company now expects full-year earnings to be “well below” its prior forecast for growth of at least 10 per cent, he said.
News by Bloomberg, Edited by Hospitality Ireland