Yum's China Sales Rose 1% in December Before Planned Spinoff

General Views Of Shanghai As China's Lingering Deflation Risks Offer Room For More Easing

A customer uses a mobile phone while eating at a KFC restaurant in Shanghai. Yum said in October that it plans to spin off its Chinese business into a separate publicly traded company.

Photographer: Qilai Shen/Bloomberg
  • KFC same-store sales gain 5% as Pizza Hut suffers 11% decline
  • Company said in October it will separate its Chinese business

Yum! Brands Inc., the operator of KFC, Taco Bell and Pizza Hut, said December same-store sales rose 1 percent in China, where the company is spinning off its operations.

KFC comparable-store sales gained 5 percent in the country, the Louisville, Kentucky-based company said in filing on Tuesday. Though they fell 11 percent at Pizza Hut, the overall performance represents an improvement from November, when sales in China declined about 3 percent.

Yum, bowing to activist pressure, said in October that it plans to spin off its Chinese business into a separate publicly traded company. The move will help the company focus on improving sales in the Asian nation, where market turmoil and food-safety scandals have weighed on results. In the fourth quarter, which includes September, October, November and December in China, same-store sales rose 2 percent.

The shares gained as much as 3.5 percent to $72 in after-hours trading in New York. Yum rose 0.3 percent in 2015, outpacing the 0.7 percent decline for the Standard & Poor’s 500 Index.

The fourth-quarter gain for restaurants open at least a year in China includes 6 percent growth at KFC and an 8 percent decline at Pizza Hut. Yum gets more than half its revenue from China, where it has about 6,900 restaurants.

Yum has said it expects growth from delivery as well as a new KFC loyalty program being introduced in China. It also is focused on selling more healthful fare and breakfast items at the fried-chicken chain. Yum had seen its results in the country hurt by a 2014 food-safety scandal in which a supplier was accused of selling expired food. It’s also facing economic volatility and more local fast-food competition.

The company plans to report full total fourth-quarter earnings on Feb. 3.

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