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Yum Brands earnings miss estimates as China weighs on KFC, Pizza Hut gross sales

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Vehicles wait in line on the drive by way of lane of a Yum! Brands Inc. Kentucky Fried Chicken (KFC) and Taco Bell restaurant in Lockport, Illinois, U.S.

Daniel Acker | Bloomberg | Getty Images

Yum Brands on Wednesday reported quarterly earnings and income that missed analysts’ expectations as lockdowns in China weighed on gross sales.

The firm additionally mentioned it will miss its long-term goal for working earnings this 12 months on account of suspending Russian operations.

Here’s what the corporate reported in contrast with what Wall Street was anticipating, based mostly on a survey of analysts by Refinitiv:

  • Earnings per share: $1.05 adjusted vs. $1.07 anticipated
  • Revenue: $1.55 billion vs. $1.59 billion anticipated

Global same-store gross sales rose 3% within the quarter.

Yum’s KFC chain reported same-store gross sales progress of three% through the interval, however the firm mentioned, excluding China, same-store gross sales for the fried hen chain really climbed 10%. China is KFC’s largest market by system-wide gross sales. Wall Street was anticipating same-store gross sales progress of 4.4%, in response to StreetAccount estimates.

Likewise, China additionally weighed on Pizza Hut’s outcomes. The market is the pizza chain’s second-largest. Pizza Hut reported flat world same-store gross sales progress for the quarter. International markets, together with China, noticed same-store gross sales rise 5%.

CFO Chris Turner mentioned it is unclear when demand in China will bounce again.

Pizza Hut’s U.S. gross sales have been additionally underneath stress. The chain mentioned same-store gross sales declined 6% in its dwelling market.

“We still see strong demand in the Pizza Hut U.S. business, but it’s primarily a challenge of being able to fill it with the labor challenges around drivers,” Turner mentioned on the corporate’s convention name with analysts.

Taco Bell was the one chain in Yum’s portfolio to report better-than-expected same-store gross sales progress, at 5% versus an anticipated 2.7%.

Yum opened 628 web new areas through the quarter, most of which have been KFC eating places. Digital orders accounted for greater than 40% of transactions and $6 billion in system-wide gross sales through the quarter.

Net gross sales rose 4% to $1.55 billion, falling wanting expectations of $1.59 billion.

The firm reported first-quarter web earnings of $399 million, or $1.36 per share, up from $326 million, or $1.07 per share, a 12 months earlier.

Excluding refranchising positive aspects, earnings from Russian operations and different gadgets, the corporate earned $1.05 cents per share, lacking the $1.07 per share anticipated by analysts surveyed by Refinitiv.

Yum pledged to donate web earnings from its Russian operations to humanitarian efforts after the Kremlin invaded Ukraine. It additionally briefly closed company-owned KFC areas in Russia and is finalizing an settlement with its Russian franchisee to droop Pizza Hut operations within the nation. Russia accounted for about 2% of Yum’s system-wide gross sales in 2021, and it was a key marketplace for new restaurant growth.

Due to its exclusion of Russian earnings, Yum mentioned it will fall wanting its long-term goal to generate high-single digit progress for its core working earnings. Instead, for 2022, it is now anticipating core working revenue progress within the mid-single digits.

Read the complete earnings report right here.

This is breaking information. Please test again for updates.

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