Yum! Brands released its third quarter earnings results after closing bell tonight, posting adjusted earnings of $1 per share on $3.43 billion in revenue. Analysts had been expecting earnings of $1.06 per share and $3.68 billion in revenue for the quarter. In last year’s third quarter, the fast food chain operator posted earnings of 87 cents per share and revenue of $3.35 billion, beating earnings estimates but missing on revenue.
Shares of Yum! Brands plunged in after-hours trades, falling as much as 17.66% to $68.72 per share in just a few minutes.
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Yum Brands GAAP earnings rise
Yum posted GAAP earnings of 95 cents per share, compared to 89 cents per share in last year’s third quarter. The fast food chain operator reported a 6% increase in global system sales and a 3.3 percentage point increase in worldwide restaurant margin, which brought it to 18.2%. Also global operating profit rose 23% year over year.
Sales in Yum’s China Division increased 8% year over year due to a 7% increase in units and 2% increase in same store sales. The KFC Division recorded a 6% sales increase, including 3% growth in units and 3% in same store sales growth. The Pizza Hut division saw a 2% increase in system sales, 2% increase in units, and 1% increase in same store sales, while the Taco Bell division saw a 7% increase in system sales, 3% growth in units, and 4% increase in same store sales. Yum’s India Division saw a 9% decline in system sales, a 10% increase in units, and an 18% decline in same store sales.
Yum! Brands cuts guidance
Yum management cited sales in China as a huge problem, saying that it “remains difficult to forecast” sales in the region. However, they’re now projecting same store sales to be in the negative by the low single digits. For the fourth quarter, the company is forecasting sales growth in the mid-single digits in China, positive same store sales growth at KFC, and negative sales growth at Pizza Hut Casual Dining.
Management now expects earnings per share growth for the full year to be positive in the low single digits.