Yum! Brands, Inc. (NYSE:YUM) sales have plummeted in China. The large food brand, which owns Pizza Hut, Taco Bell, and KFC, declined 9.5 percent to just $67.39 a share.
The shares declined 9.5% to $67.39 at morning. Earlier the company slid ten percent, the largest decline since 2008.
According to analyst David Tarantino (from Robert W. Baird & Co), China’s softness may reflect choppy macroeconomic conditions, with cautious consumer sentiment surrounding the recent government transition.”
Yum! Brands, Inc. (NYSE:YUM) store-sales increased by 21% percent last year which means this recent decline is fairly significant, considering China accounts for 44% of the company’s revenues.
Tarantino also gave the company an outperform rating. Just yesterday, Yum! Brands, Inc. (NYSE:YUM) announced plans to open up 700 shops in 2013, a number down from last year’s 800.
What does this mean for the future of this company? On CNBC’s “Fast Money”, stock market analysts contemplated the possibilities.
Pete Najarian from OptionMonster.com suggested, “I still like the fact they gave their full-year guidance the same as it had been, talking about their growth being 10 percent, not 14 percent, as far as earnings per share. The valuations were too high. Now I think they’re giving you an opportunity to get in. “
Stephen Weiss (a stock buyer who didn’t invest in Yum Brands) said, “They were supposed to come in with a plus-2 percent comp, which for such a growing market, that’s puny. They’re growing more in the U.S. Instead, comps were down 4 percent. That’s a major, major change. I want to see what else is going on here before I step into the stock.”
There is no telling on what’s going to happen next to Yum! Brands, Inc. (NYSE:YUM), but it may mean that the company has to make a few changes. What those changes are and if they take place will remain to be seen. In the meantime, we can only hope that a decline like this doesn’t happen again.
