Dipping Sales Effects Yum! Brands Inc (NYSE:YUM)
Dipping sales in China has had Yum! Brands, Inc (NYSE:YUM) running for cover. The company Q3 net profit plummeted 68% to $152M in comparison to the previous year. In China, there was an 11% drop in same store sales and a 13% drop came from KFC alone.
The China fiasco
Yum! Brands, Inc (NYSE:YUM)’s quarterly profit was considerably lower than the analyst estimates of $421M. David Novak, the company’s Chief Executive Officer said that despite the company’s dismal performance in the Q3, he remains confident about their ability to deliver some strong and sustainable growth in the coming years.
The company’s sales in China have taken a plunge right through 2103. Another factor that has hurt the company’s sales is the food safety scandal and scare over the new bird-flu strain. As per the company statement, the projection is that there will be a drop in same store sales again in the Q4 of this year.
Dipping sales, dipping hopes
Yum! Brands, Inc (NYSE:YUM) has its hoped pinned on growth in China and it operates over 4,200 KFC restaurants there. In addition, it also has around 800 Pizza Hut outlets in the country. In an effort to gain some leverage into the local Chinese market, Yum! Brands, Inc (NYSE:YUM) had acquired Little Sheep, the local hot-pot chain but those restaurants have also underperformed.
In Tuesday’s trading, Yum! Brands, Inc (NYSE:YUM) rose 0.34%. The opening price of the shares was $71.25, which climbed to an intraday high of $72.08 and dipped to a close of $71.67. Approximately 6.56 million shares were traded on Tuesday while an average volume of 2.36 million shares were traded over a 30 day period. The 52-week low of Yum! Brands, Inc (NYSE:YUM) shares is $59.68 and its 52-week high is $75.13. The company has a market capitalization of $31.98 billion.