Yum Posts Surprise China Sales GainLeslie Patton
Yum! Brands Inc., owner of KFC and Pizza Hut, posted a surprise gain in same-store sales in China last month as promotions lured diners to the company’s fried-chicken chain.
Sales at stores open at least 12 months in China rose 1 percent, the Louisville, Kentucky-based company said yesterday in a statement. Analysts estimated a 1.2 percent decline, the average of nine projections from Consensus Metrix. Comparable-store sales were unchanged at KFC, after eight straight monthly declines, and increased 7 percent at Pizza Hut.
A limited-time, half-priced “bucket promotion” helped spur KFC sales during the beginning of November, Yum said. After the discount ended on Nov. 10, the chain’s same-store sales were down 8 percent for the rest of the month.
“They were able to drive traffic with the promotion,” Sara Senatore, a New York-based analyst at Sanford C. Bernstein, said in an interview. “A worst-case scenario would be to have this type of promotion and have it fall totally flat -- I certainly think it could have been a lot worse.”
KFC introduced an advertising campaign in November about quality assurance in China that features store employees and poultry farmers. The chain has been seeing more competition from local restaurants and is trying to lure back consumers following an outbreak of avian flu and the investigation of a former supplier for selling food with too much antibiotics.
Yum fell 2.7 percent to $75.61 at the close in New York. The shares have advanced 14 percent this year, compared with a 23 percent increase for the Standard & Poor’s 500 Restaurants Index.
The fast-food company yesterday also reiterated its forecast for a 20 percent profit increase, excluding certain items, in 2014. Yum, which gets about half of its revenue from China, has more than 6,000 restaurants there. It will open about 700 new stores in China next year.
Comparable-store sales are considered an indicator of growth because they include only older, established locations. Yum, which also owns Taco Bell, will release December China same-store sales on Jan. 13.