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Yum China says same-store sales fall slowing, with April down 10%

Stock Markets Apr 29, 2020 00:05
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© Reuters. The booth of fast food restaurant company Yum China Holdings Inc. is seen at an investment and trade fair in Hefei, Anhui
 
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(Reuters) - Yum China Holdings Inc (N:YUMC) on Tuesday beat estimates for quarterly revenue and said the decline in same-store sales was slowing even as the vast majority of consumers still avoid going out in public to contain the spread of the coronavirus.

Yum China said its month-to-date same-stores sales were down by more than 10%, still an improvement from the 15% decline it experienced in the first quarter ended March 31.

Shares of Yum China, the exclusive licensee of the KFC, Pizza Hut and Taco Bell brands in China, rose 3.3% in extended trading.

The coronavirus-led lockdown made major Chinese cities look like ghost towns as people avoided visiting restaurants, forcing Yum China to roll out contactless delivery and pickup at its KFC and Pizza Hut locations to curb falling sales.

Digital orders - including delivery, mobile orders and kiosk orders - accounted for 84% of sales at KFC and 65% of sales at Pizza Hut in the first quarter, an increase of 29 and 36 percentage points, respectively, from a year earlier.

Total revenue fell to $1.75 billion (1.4 billion pounds) from $2.30 billion but well ahead of market expectations of $1.56 billion.

Net income fell to $62 million, or 16 cents per share, from $222 million, or 57 cents per share, a year earlier.

However, Chief Financial Officer Andy Yeung said restaurant traffic is still below pre-outbreak levels.

"We expect an extended recovery period, and that the pace will be uneven across regions, dayparts and segments."

Yum China also said it will temporarily suspend its share repurchases and for the next two quarters dividends, citing the impact of the coronavirus pandemic and economic uncertainty.

The rapid spread of the coronavirus prompted restaurants, including McDonald's Corp (N:MCD) and hotpot chain Haidilao (HK:6862), to close temporarily or cut working hours to contain the spread of the virus and Yum China said about 99% of stores in China are either partially or fully open.

It also reaffirmed its plans to open 800 to 850 new stores in the country in 2020.

Yum China says same-store sales fall slowing, with April down 10%
 

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