Same-store sales at the company’s China KFC stores rose 15% and Pizza Hut’s China same-store sales were flat. Yum owns 6,387 restaurants in China, including its Little Sheep and East Dawning chains.
Same-store sales in the U.S. portion of the KFC division declined 2%. U.S. same-store sales also fell 4% in the Pizza Hut division and rose 2% in the Taco Bell division.
Same-store sales also declined 2% in India, although total sales rose 18%, excluding currency effects.
The company’s CEO had a lot to say about China:
Operating profit grew 188% in China driven by strong sales and margin performance. … China Division system sales increased 21% as we opened 104 new restaurants and delivered same-store sales growth of 15%. Restaurant margins were 16.8%, which was 6.2 percentage points above prior year.
Yum’s performance in the U.S. continues to falter. The company still plans to open 1,250 new restaurants outside of China in 2014, but it is the growth in China that is keeping the company in the black. The EPS and revenue misses will weigh on shares in the after-hours session and again on Thursday.
Yum did not offer any guidance, but the consensus estimates for the third quarter call for EPS of $1.10 on revenues of $3.88 billion. For the full year the EPS estimate is $3.72 and the revenue estimate is $14.5 billion.
The stock traded down about 2.3%, at $80.85 in a 52-week range of $64.08 to $83.58. Thomson Reuters had a consensus analyst price target of around $86.00 before this report.
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