Bloomberg’s Leslie Patton previews Yum!
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On Tuesday, the fast-food giant reported third-quarter-earnings results. She speaks with Bloomberg’s Pimm Fox on “Bloomberg Markets”.
Wall Street stocks rose early Wednesday as stronger oil prices lifted petroleum-linked shares even as Yum Brands and a few other companies fell on disappointing earnings.
On Tuesday, Yum posted its third straight quarter of sales declines in India, where analysts say it is being outpaced by ambitious rivals like Domino’s Pizza Inc and McDonald’s Corp. “I don’t want you to count us out”.
China division’s comps increased 2% comparing favorably with a 14% drop in the year-ago quarter and a 10% drop last quarter.
Spinning off Taco Bell may be one fix that Yum Brands needs right now. This can also restrain the sales momentum at Yum! “It has been hurting the model and the valuation of your stock for three years now”.
The company said sales in China rose just 2 percent at established locations, reflecting a 3 percent increase at KFC and 1 percent decline at Pizza Hut.
All things considered, things got bad in a hurry for YUM, and who knows if its performance improves or worsens from this point forward. Yum, based in Louisville, Kentucky, has been trying to win back customers after negative publicity stemming from food supply controversies. Sluggish growth in same store sales (SSS) in China, which contributes more than half of Yum Brands’ operating profit, hit Yum Brands shares, analysts said.
Now what: Yum! CEO Greg Creed elaborated during this morning’s conference call, saying historically Pizza Hut in China has delivered impressive growth by revamping 25% of its menu every six months. “We will take massive action to turn around marketing missteps we have had”.
There is no question about it. Yum! Jefferies Group restated a hold rating and issued a $76.00 price target on shares of Yum! The USA based Yum Brands operates over 800 restaurants in India with Pizza Hut and KFC brands across the country, and seven Taco Bell joints as well. Brands profit rose 4%. Begun with comedian Darrell Hammond in early summer, KFC’s campaign switched actors in mid-stream.
The company’s board approved a 12 percent rise in the quarterly dividend to $0.46 per share. Earnings amounted to $1 a share in the period, excluding certain items.
Adobe Systems Inc (ADBE) plunged 5.9% or $5.07 to $80.06 after the software company estimated revenues for the fourth-quarter between $1.28 billion to $1.33 billion and earnings per share in the range of 32 cents to 38 cents.
Yum’s total revenue rose to $3.43 billion last quarter, which ended September 5. Brands in a research note on Tuesday, August 11th.
“The stock is saying people are giving up on Yum”. However, they think those successes “may have masked a few cost/ bureaucracy bloat that built over time” and that hasn’t been addressed yet.
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Shares of Yum were down more than 16 percent at $83.42 in after-hours trading.
