A same-store sales decline of 14 percent in Yum! Brands Inc.’s China division negatively impacted earnings for the Sept. 6-ended third quarter, the company said Tuesday.
The Louisville, Ky.-based parent of KFC, Pizza Hut and Taco Bell said systemwide sales in its China division fell 9 percent in the wake of a July 20 televised undercover report on the improper food handling practices of supplier Shanghai Husi. Yum ended its relationship with Shanghai Husi, as well as its parent company OSI Group LLC, after the incident.
The 14-percent same-store sales decline was slightly worse than the 13-percent decrease for the quarter that Yum forecast for in early September.
On Tuesday, Yum forecast 2014 earnings growth of 6 percent to 10 percent, and said it expects sales in China to improve.
"I'm absolutely confident in Yum! Brands' ability to deliver strong, sustainable growth in the years ahead despite the recent supplier incident in China, which has significantly impacted China sales,” David C. Novak, Yum’s chairman and chief executive, said in a statement.
Yum has 40,000 restaurants in more than 125 nations and territories.
3Q NET INCOME
Result: $404 million, or 89 cents per share% Increase: 165.8% (from $152 million, or 33 cents per share)
3Q REVENUE
Result: $3.35 billion
% Decrease: 3.2% (from $3.47 billion)
3Q SAME-STORE SALES
% Decrease in China: 14%
% Decrease in India: 4%
3Q SAME-STORE SALES OUTSIDE CHINA, INDIA
% Increase at KFC: 3%
% Decrease at Pizza Hut: 1%
% Decrease at Taco Bell: 3%
Source: Company report
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