Yum’s Struggling Pizza Hut Shows Early Hint of Turnaround
(Bloomberg) -- Yum! Brands Inc. reported flat sales at its struggling Pizza Hut chain in the latest quarter. While that’s better than the expected decline, it wasn’t enough to assuage investors.
- Overall comparable-store sales, a key gauge of performance for restaurant chains, topped estimates with growth of 3 percent, compared with the 2.5 percent gain anticipated by analysts. The rest of Yum’s quarterly results were mixed, with earnings per share falling short of estimates by a wide margin. The company also maintained a full-year earnings forecast that is below projections.
- Yum is betting Pizza Hut’s performance will turn around with improved delivery and promotions. This contributed to a sharp erosion of operating margin last quarter, however.
- Taco Bell, meanwhile, succeeded in luring budget-conscious U.S. diners with more discounts. It’s also expanding overseas, in countries such as Thailand, to maintain growth. Comparable sales at the Mexican-inspired chain rose a better-than-expected 6 percent. KFC same-store sales also slightly beat.
- At the corporate level, operating profit declined sharply. The company is spending more on advertising and delivery services, while the wider industry faces growing pressure from labor, commodity and transportation costs.
- The shares fell as much as 6.4 percent before paring most of the loss on Thursday.
- For full Yum statement, click here.
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