Yum Brands Inc. reported Wednesday an $86 million loss in the fourth quarter, as continued weakness in China offset sales growth at Taco Bell and improving sales at KFC.
Excluding special items, Yum reported that earnings per share fell 29 percent, to 61 cents, from 86 cents the year before. For the full year, the company’s earnings per share rose 4 percent, to $3.09, from $2.97 in 2013.
The special item was a $361 million net charge in which Yum wrote down assets related to its Little Sheep brand in China, which has struggled since Yum bought the concept in 2012. With that special charge, Yum recorded a net loss of $86 million, or 20 cents per share.
Company revenue fell 4 percent in the quarter ended Dec. 27, to $4 billion, from nearly $4.2 billion a year ago. For the year, revenue rose 1 percent, to $13.3 billion, from $13.1 billion.
“Overall results in 2014 were disappointing,” Yum CEO Greg Creed said in a statement. “While the sales recovery in China continues to be slower than expected, we anticipate a strong second half of 2015 as the turnaround gains momentum.”
“Outside of China, we are pleased with the momentum we are seeing across the KFC and Taco Bell divisions,” he added.
Taco Bell’s same-store sales rose 6 percent in the fourth quarter, the company said, driven by breakfast sales in the U.S., where same-store sales rose 7 percent.
Creed said that the launch of breakfast and mobile ordering in 2014, combined with more innovation, should help Taco Bell in 2015.
At KFC, system sales rose 7 percent in the fourth quarter, thanks in part by new unit growth and a 4-percent same-store sales growth in emerging markets as well as 3 percent in developing markets. In the U.S., where the chain has struggled over the years, same-store sales rose 6 percent.
China remains plagued by problems following a food safety scandal this summer that hurt sales at many Western concepts. Same-store sales decreased 16 percent in the company’s China division, leading to an 11-percent decline in systemwide sales there.
Pizza Hut’s systemwide sales rose 1 percent for the year and 2 percent for the quarter, the company said. Same-store sales for the brand were “even” for the quarter in both the U.S. and international markets outside of China.
4Q NET LOSS
Result: $86 million, or 20 cents per share(from $321 million, or 72 cents per share)
4Q REVENUE
Result: $4 billion% Decrease: 4% (from $4.2 billion)
4Q SAME-STORE SALES
% Increase KFC: 4%
% Increase Pizza Hut: —
% Increase Taco Bell: 6%
% Decrease China: 16%
% Decrease India: 10%
Source: Company report
FULL YEAR NET INCOME
Result: $1.05 billion, or $2.37 per share% Decrease: 4% (from $1.09 billion, or $2.41 per share)
FULL YEAR REVENUE
Result: $13.3 billion% Increase: 1% (from from $13.1 billion)
FULL YEAR SAME-STORE SALES
% Increase KFC: 3%
% Decrease Pizza Hut: 1%
% Increase Taco Bell: 3%
% Decrease China: 5%
% Decrease India: 5%
Source: Company report
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• More restaurant finance news
This story has been revised to reflect the following correction:
Correction: February 5, 2015 An earlier version of this story misstated the number of KFC’s same-store sales in the U.S. They grew 6 percent in the fourth quarter. In addition, the graphic should have said that fourth quarter revenue was $4 billion.
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
