Yum's sales view misses, shares off
LOS ANGELES |
LOS ANGELES (Reuters) - Yum Brands Inc (YUM.N), the parent of the KFC, Taco Bell and Pizza Hut fast-food chains, forecast fourth-quarter sales at established restaurants that were below some analysts' estimates, and its shares fell 4.3 percent.
The Louisville, Kentucky-based company on Friday repeated its 2009 and 2010 earnings growth forecasts, but warned that a "difficult consumer environment" would make it hard to increase sales at its outlets that have been open for a least a year.
The company said it expected fourth-quarter same-restaurant sales to fall 3 percent in mainland China, to fall 1 percent in its other international markets, and to decline 8 percent in the United States, where Yum competes with chains like McDonald's Corp (MCD.N) and Domino's Pizza Inc (DPZ.N).
The update on same-store sales trends "will come as a modest disappointment to investors, especially as trends in China appear to have decelerated further, and the stock is likely to come under modest pressure," Bernstein Research analyst Sara Senatore said in a client note.
Yum gets more than half its operating profit from China and other overseas businesses, and investors expect most of its future growth to come from those markets, where the company is rapidly building restaurants.
Yum's fourth-quarter sales forecast was in line with Senatore's view regarding Yum's international markets, but was worse for China and the United States, its largest markets.
Senatore had expected the quarter's same-restaurant sales to rise 1 percent in China and to fall 7 percent in the United States.
The restaurant operator continues to expect 2009 earnings per share growth of 12 percent, excluding special items, helped by lower commodity costs and the addition of 1,400 new units in China and other international markets.
Yum, which operates restaurants in 110 countries, expects 2010 will be another challenging year, but reiterated its projection for earnings per share to rise at least 10 percent on the strength of international expansion, cost cuts, modest sales growth and favorable currency movements.
Yum shares were down 2.8 percent at $34.15 in afternoon trade on the New York Stock Exchange.
(Reporting by Lisa Baertlein in Los Angeles and Phil Wahba in New York; Editing by Lisa Von Ahn)
- Tweet this
- Share this
- Digg this