What is in this article?:
- Yum China same-store sales rise slightly in November
- A mixed outlook
A KFC value promotion aided the result, which was the first same-store sales increase for the division since February 2013.
Yum! Brands Inc. reported a 1-percent increase in same-store sales in its struggling China division for the month of November, aided largely by an aggressive value promotion at KFC.
Securities analysts characterized the company’s underlying comparable-sales trends in the crucial China segment as sluggish heading into December and the new year, yet Yum nonetheless predicted a “bounce back” in its earnings growth guidance for fiscal 2014 ahead of its annual Investor Day event, which is scheduled for Dec. 4.
The Louisville, Ky.-based operator or franchisor of KFC, Pizza Hut and Taco Bell said its 1-percent gain in same-store sales in China — the first increase since February 2013, when a calendar shift for Chinese New Year obscured plummeting sales at KFC — included flat sales at KFC and a 7-percent increase at Pizza Hut Casual Dining.
The company noted that a “Half Priced Bucket” promotion at KFC that ran through Nov. 10 drove a 16-percent increase in same-store sales in China through the first 10 days of the month, before comparable sales decreased 8 percent for the rest of November.
In a statement, Yum chief executive David Novak said the company expects to recover in 2014 from a “year that is clearly below our high expectations,” which resulted chiefly from sales falling precipitously at KFC amid nationwide fears of avian flu and of a contaminated poultry supply.
“In China, we have an aggressive plan to reignite sales at KFC, and we expect continued strong performance at Pizza Hut Casual Dining,” Novak said. “In addition, our international new-unit development pipeline remains extremely robust. We expect to open at least 1,850 new restaurants outside the U.S., further strengthening our leadership position in emerging markets.”
He added that Yum also expects development momentum in the United States, mostly from Taco Bell and that chain’s impending nationwide rollout of breakfast. He also touted the company’s recent decision to combine the United States and former Yum Restaurants International segments to form global reporting divisions for each of its three individual brands, excluding separate companies for China and India.
For 2014, Yum expects to grow earnings per share of at least 20 percent, excluding special items, and the company is forecasting the China division to increase its operating profit at least 40 percent from its historically low result in 2013. Yum projects that it will open 1,850 new restaurants worldwide next year, including 700 new locations in China, 150 in India, and at least 600 new KFCs and 400 new Pizza Huts worldwide.