Yum! Manufacturers misses on income, Pizza Hut gross sales gradual whereas Taco Bell, KFC drive development
The quick meals conglomerate posted a beat on EPS, however missed on income because it reported Wednesday morning earlier than market open. Pizza Hut’s lackluster gross sales introduced down numbers, however KFC and Taco Bell proceed to drive gross sales for Yum! Manufacturers (YUM).
Income got here in decrease than anticipated at $1.71 billion, in comparison with estimates of $1.77 billion, whereas adjusted earnings per share got here in at $1.44, increased than Wall Avenue’s expectation of $1.27.
In Q3, same-store gross sales elevated 6%, led by KFC (up 6%), and Taco Bell (up 8%), each beating estimates. CEO David Gibbs referred to as the 2 manufacturers “twin development engines…with KFC exhibiting broad-based power throughout each developed and rising markets.”
The finger-lickin’ hen chain’s efficiency in China, the place it derives 1 / 4 of its gross sales, continues to outperform. In Q3, whole restaurant gross sales there was up 16%, whereas they had been flat within the US. Hen nuggets launched final summer season had been a success this quarter, and the corporate plans to lean additional into the boneless treats, Gibbs mentioned on a name with traders.
Taco Bell continues to be sturdy within the US, as increased earnings shoppers commerce right down to cheaper eats when wallets get tighter. “We see actually constant 2% to three% transaction development throughout all earnings ranges,” Gibbs mentioned of the taco chain.
Based on TD Cowen analyst Andrew Charles, the Volcano Menu, a 2000s throwback menu merchandise that hit shops once more in June, might have helped to drive orders because it was the second most requested historic, after the Mexican Pizza.
Pizza Hut was a disappointment, with similar retailer gross sales up simply 1% within the quarter, whereas Behavior Burger Grill Division noticed same-store gross sales decline 5%.
12 months-to-date, shares of Yum! Manufacturers are down almost 6%, in comparison with the S&P 500’s (^GSPC) acquire of 8.5%.
The earnings rundown
Adjusted earnings per share: $1.44 versus $1.27 anticipated
Income: $1.71 billion versus $1.77 billion anticipated got here in at
Identical-Retailer Gross sales: 6% versus 4.93% anticipated
In Q3, the corporate added 1,130 new areas for its manufacturers. Digital gross sales — a key part to boosting loyalty applications — surpassed $7 billion within the quarter, making up 45% of whole gross sales.
Previous to earnings, Baird analyst David E. Tarantino mentioned Yum! Manufacturers is “effectively positioned amid macro uncertainties” in a word to shoppers.
He added that it “can maintain strong franchisee-led unit development..which mixed with YUM’s sturdy model portfolio ought to have resilience in vary of financial eventualities.”
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Brooke DiPalma is a senior reporter for Yahoo Finance. Observe her on Twitter at @BrookeDiPalma or e mail her at bdipalma@yahoofinance.com.
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