Yum China Sales Miss Estimates as Pizza Hut Lags Behind

Updated on
  • While results were positive at KFC, pizza chain remains weak
  • Pizza Hut comparable sales fell 5 percent in latest quarter
Bloomberg’s Allen Wan discusses the hard time Pizza Hut is currently having in China.

A new mobile app and marketing push weren’t enough to energize sales at Yum China Holdings Inc.’s Pizza Hut in the latest quarter.

Systemwide, same-store sales missed analysts’ estimates, rising 3 percent compared with a projection for 3.3 percent growth. The disappointing results sent the company’s shares down as much as 10 percent in late trading in New York.

Yum China, created from the split of U.S. fast-food company Yum! Brands Inc. in 2016, has struggled to attract younger diners to Pizza Hut. Overhauling its mobile app, upgrading its menu and enlisting celebrities to tout the brand haven’t helped much so far. Pizza Hut’s comparable sales declined 5 percent, far deeper than the 0.3 percent drop seen by analysts, according to Consensus Metrix.

Sales by that measure at KFC rose 5 percent, compared with projections for growth of 3.8 percent. The fried-chicken chain’s digital push has helped attract Chinese diners. KFC’s loyalty program also is fueling the brand, with its membership growing to more than 120 million, Yum China said in a statement.

The shares fell as low as $38.10 in after-hours trading in New York. Yum China had gained 6.1 percent this year through Tuesday’s close.

Earnings excluding certain items amounted to 53 cents a share in the quarter, while analysts estimated 49 cents, on average.

(Updates with KFC loyalty members in fourth paragraph.)
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