Yum! Brands, Inc. (NYSE:YUM) reported its third quarter earnings after closing bell this afternoon, reporting earnings per share of 85 cents, excluding items. The company’s reported earnings per share were 33 cents, including a 55-cent non-cash charge for the write-down of intangible assets from Little Sheep.
Yum! Brands misses by a wide margin
In the same quarter a year ago, the fast food giant reported earnings of 99 cents on revenue of $3.6 billion. Analysts had been expecting the company to report earnings of 93 cents on revenue of $3.5 billion.
Shares of the fast food giant went spiraling downward after the results were announced, falling more than 6 percent in after-hours trading.
China dominates Yum! Brands results
Missteps in China have had an effect on the fast food chain’s bottom line. A food safety scare put Yum! Brands, Inc. (NYSE:YUM) in the center of controversy in China earlier this year. Also China’s slowing economy has taken a chunk out of the company’s results because the nation has become one of its most important markets. Investors were looking for signs that the company’s recovery there is well on its way, but unfortunately, the company provided just the opposite.
Yum! reports problems in China
Yum! Brands, Inc. (NYSE:YUM) reported that worldwide system sales grew 1 percent before the translation of foreign currency, including 5 percent growth at Yum! Restaurants International. System sales fell 2 percent in China and were flat in the U.S.
The fast food giant reported that September same-store sales fell 11 percent for its China Division, including estimated growth at Pizza Hut in China and a decline of 13 percent at KFC. The company said sales at KFC have not recovered from the food safety scare which happened in December.
Yum! Brands, Inc. (NYSE:YUM) revised its full-year outlook, mainly because of weak China sales for KFC in September. The company said it now looks unlikely that its China Division same-store sales will be positive for the fourth quarter. Because of the lower than expected China sales and a higher than expected full-year tax rate, it estimates a high-single to low-double-digit full-year earnings per share decline year over year, excluding items. Yum’s previous guidance was for a mid-single-digit decline in earnings per share.