Yum Brands Inc. reported a 9-percent decrease in net income during the first quarter ended March 21, as continued weakness in China offset strong results at Taco Bell and KFC, the company said on Tuesday.
Earnings per share excluding special items declined 8 percent, to 80 cents, falling from 87 cents in the first quarter a year ago. The results were still higher than Wall Street expected, and the company’s stock rose nearly 5 percent in after-hours trading.
“I’m pleased with the strong performance from our KFC and Taco Bell divisions, as well as continued progress we are making in China,” Yum CEO Greg Creed said in a statement.
Total company revenue fell 4 percent during the quarter, to $2.6 billion, from $2.7 billion the previous year. Net income fell 9 percent, to $362 million, from $399 million the previous year.
Same-store sales continued to fall at Yum’s China division, where a food-safety scare from last summer has led to a steep drop in sales. Still, the 12 percent same-store sales decline in the first quarter was somewhat better than the company reported in previous quarters.
The decline offset 8-percent unit growth there, leading to a total systemwide sales decline of 6 percent in China.
Taco Bell reported a same-store sales increase of 6 percent and unit growth of 3 percent during the quarter. The segment’s operating profit increased 37 percent during the quarter, and total systemwide sales rose 9 percent.
Systemwide sales at KFC rose 8 percent, including 5-percent worldwide same-store sales growth. The results included a 7-percent same-store sales increase at KFC in the U.S., as the chain continued its comeback from a years-long sales slump.
“Outside of China, our KFC and Taco Bell divisions are firing on all cylinders,” Creed said. “These powerhouse brands produced both strong sales growth and significant margin expansion.”
Same-store sales at Pizza Hut were flat, including a decline of 1 percent in the U.S.
1Q NET INCOME
Result: $362 million, or 83 cents per share% Decrease: 9% (from $399 million, or 89 cents per share)
1Q REVENUE
Result: $2.6 billion% Increase: 4% (from $2.7 billion)
1Q SAME-STORE SALES
% Increase at Taco Bell: 6%
% Increase at KFC: 5%
% Increase at Pizza Hut: ——
% Decrease in China: 12%
% Decrease in India: 11%
Source: Company report
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Correction: April 22, 2015: A previous version of this story had an incorrect figure for KFC’s same-store sales growth in the U.S.
Contact Jonathan Maze at [email protected]
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