KFC Owner Yum Posts Sales Beat But Warns of Challenges Ahead

(Bloomberg) -- Yum! Brands Inc., the owner of brands KFC, Taco Bell and Pizza Hut, reported third-quarter sales that surpassed analysts’ expectations, calling the results “encouraging” as it continued to reopen locations that were closed during the pandemic. But challenges still lie ahead, the company said.

• Same-stores sales, a key metric for restaurant operators, dropped 2% last quarter, while the projection from Consensus Metrix was for a decline of 4%. Earnings per share also beat estimates. For more details, see here.
• So far, trends from the third quarter have continued into the fourth, but it’s an “uncertain environment,” and the business will continue to face challenges, Chief Executive Officer David Gibbs said on an earnings conference call.

Key Insights

• Yum, which had struggled with a slow international recovery during the pandemic, saw growth of 1% in worldwide sales this quarter, excluding the impact of currency.
• Global sales were driven by Taco Bell, which was up 5% and helped offset declines in KFC and Pizza Hut.
• For the second consecutive quarter, digital sales rose by more than $1 billion from a year earlier.

Market Reaction

• Yum shares fell 2.2% on Thursday in New York trading. The stock had dipped 5.6% this year through Wednesday’s close.
• Read the company statement here.

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