For the full year Yum! reported EPS of $2.97 on revenues of $13.08 billion compared with EPS of $3.25 on revenues of $13.63 billion in 2012. The consensus estimate called for EPS of $2.91 on revenues of $13.16 billion.
The news on same-store sales belies somewhat the positive earnings beat. Same-store sales at the company’s 4,563 KFC outlets in China fell 4% for the quarter and 15% for the full year. An issue regarding the company’s poultry supply in late 2012 carried over all of 2013. In the third quarter, Yum! also took a $258 million impairment charge against its Little Sheep restaurants in China even though the company said there was never a problem with the quality of the food at these stores. A company spokesman told Reuters Monday afternoon that a recent outbreak of bird flu in China has had no impact on Yum’s sales.
In the U.S., Yum’s fourth quarter same-store sales fell 2% in the fourth quarter but were flat for the full year. Restaurant margins were down 0.3% in the quarter but up 0.6% for the year.
The company’s CEO reaffirmed what he said at the end of the third quarter: “…[W]ith the decisive actions we’ve taken to strengthen our company across the board, we are well positioned to deliver double-digit EPS growth in 2014 and the years ahead.”
Same-store sales in the international division’s emerging markets rose by 3% for the quarter and 4% for the year. Sales in developed markets were flat for the year and up 1% in the quarter.
To make good on the promise to grow earnings by double-digit percentages again, Yum! will need once and for all to overcome the loss of sales in China and do something to boost U.S. sales. Yum! did not offer any guidance, but the consensus estimates for the first quarter call for EPS of $0.85 on revenues of $2.83 billion. For the full year the EPS estimate is $3.60 and the revenue estimate is $14.7 billion.
Yum’s stock is trading up about 4.3% at $69.02 after closing at $66.16. The 52-week range is $59.68 to $78.68. Thomson Reuters had a consensus analyst price target of around $79.70 before today’s report.
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