Signage is displayed outside of a Yum! Brands Inc. Taco Bell and Kentucky Fried Chicken (KFC) restaurant in Louisville, Kentucky, USA on Thursday, January 30, 2020.
Luke Sharrett | Bloomberg | Getty Images
Yum Brands reported quarterly earnings and revenues Thursday that exceeded analysts’ forecasts, despite the international dining room shutdown weighing in on same-store sales growth at KFC and Pizza Hut.
The company’s stock was up less than 1% in premarket trading.
This is what the company reported compared to what Wall Street expected, based on an analyst survey by Refinitiv:
- Earnings per share: $ 1.15, adjusted, vs. Expected $ 1.01
- Revenue: $ 1.74 billion vs. $ 1.72 billion expected
Yum reported fourth quarter net profit of $ 332 million, or $ 1.08 a share, compared to $ 488 million or $ 1.58 a share a year earlier.
Excluding items, the company earned $ 1.15 per share, beating the $ 1.01 per share expected by analysts polled by Refinitiv.
Net sales increased 3% to $ 1.74 billion, exceeding expectations of $ 1.72 billion. Globally, the company’s same-store sales declined 1% during the quarter, and Taco Bell was the only brand to report positive same-store sales growth.
While the coronavirus pandemic has dealt a blow to sales, Yum has benefited from the consumer shift to digital ordering and selling outside the building.
“Our business model has really gotten stronger over the past 12 months,” said CEO David Gibbs. “The shift to off-premise is a good fit for us and improves the economics of our franchisees.”
Taco Bell sales in the same store were up 1% in the quarter. Most of the locations are in the US, where fast food chains have quickly recovered from the health crisis.
KFC saw total sales in the same store shrink by 2%. Same store sales in the US were up 8%, fueled by drive-thru orders, but the international locations saw sales in restaurants opening at least a year at 4%. Only 18% of KFC’s revenue comes from its home market, and China accounts for more of its system sales than the US. The chicken chain opened its 25,000th location during the quarter.
Pizza Hut sales in the same store declined by just 1% in the quarter. The coronavirus pandemic has accelerated its turnaround in the US, cementing its reputation for delivery and takeout rather than dining out. Same-store US pizza chain sales were up 8% in the quarter. Outside the US, however, Pizza Hut is taking longer to recover and international sales in the same store were down 7%.
The Habit Burger Grill, which was acquired by Yum last year, reported a 5% drop in sales at the same store. The burger chain is much smaller than Yum’s other brands.
From Thursday, about 98% of Yum restaurants are open, with full or limited capacity.
Yum added 227 net new restaurants during the quarter. Pizza Hut was the company’s only brand to close more locations than it opened. CFO Chris Turner said the pizza chain closures were mostly underperforming restaurants.
While Yum sees favorable real estate deals, executives told analysts that the company is also facing permits and construction delays as a result of the pandemic.
The company declined to provide a forecast for fiscal 2021, citing the uncertain environment caused by the crisis. So far, US sales growth in the first quarter has slowed slightly from the fourth quarter due to the regional revival of Covid-19.
Read the full report here.