Yum Brands comparable sales miss as Pizza Hut, Taco Bell disappoint
YUM Brands Inc’s quarterly sales fell short of Wall Street estimates on Thursday, as fewer customers dined at its Pizza Hut and Taco Bell chains, sending its shares down slightly in morning trading.
Executives last quarter had warned that the second quarter would likely be the weakest period of the year.
In February, Yum was forced to shut hundreds of British KFC outlets after a supplier change led to shortages of everything from chicken to gravy, in a snafu that led to a months-long recovery.
“I remain confident our actions to become more focused, more franchised and more efficient are establishing the foundation required for sustainable, longterm growth that will translate to strong returns for all Yum! Brands stakeholders,” chief executive Greg Creed said in a statement.
Yum, the parent company to brands KFC, Pizza Hut and Taco Bell, said it continues to expects its full-year performance to land within earlier guidelines.
New unit growth for the year is now expected at the high end of the three per cent to four per cent range, while same store sales growth will clock in at the lower end of between two per cent and three per cent growth.
Yum shares pared back earlier losses to slip 0.53 per cent in morning trading. Its shares are down 3 percent since the start of the year.
Sales at Yum’s worldwide restaurants open for at least a year rose one per cent, missing analysts’ average estimate of a 1.92 per cent rise, according to Thomson Reuters.
Same-store sales at Pizza Hut posted a surprise drop of 1 percent, missing expectations of a 1.21 percent increase, while Taco Bell’s two per cent rise also fell short of estimates.
“(Pizza Hut) comps were worse than already low expectations, but KFCwastherealdisappointment,” Bernstein analyst Sara Senatore wrote in a research note.
Net income rose to US$ 321 million, or 97 cents per share, in the second quarter ended June 30 from US$206 million, or 58 cents per share, a year earlier.
Excluding one- time items, Yum earned 82 cents per share, beating analysts’ expectations of 74 cents.
Total revenue fell 5.5 per cent to US$ 1.37 billion, but edged past estimates of US$1.36 billion. — Reuters