Yum China Rises After Surprise Quarterly Gain in Sales at KFC

(Bloomberg) -- Yum China Holdings Inc., operator of KFC and Pizza Hut in China, gained in late trading after its chicken chain had a surprise gain in a key sales metric.

  • Same-store sales at KFC rose 1 percent, compared with analysts’ estimates that they would fall. Systemwide, those sales dropped, but not as much as projected.

Key Insights

  • While the fast-food company is facing tough competition for KFC, the fried-chicken chain had been luring in diners with new breakfast fare, coffee and desserts, such as ice cream.
  • Pizza Hut didn’t fare so well in the period, with in-store customer traffic falling. Same-store sales dropped 5 percent, more than estimated. Yum China has been trying to turn around the brand by remodeling older restaurants, which the company has said is hurting sales and margin in the short term.
  • Also helping lift the shares, Yum said its board this month increased the company’s share buyback program to $1.4 billion from $550 million.

Market Reaction

  • Yum China rose as much as 5.2 percent to $33.34 in after-hours trading in New York. The stock had dropped 21 percent this year through Tuesday’s close.

©2018 Bloomberg L.P.