Yum!, the parent company of KFC, Pizza Hut and Taco Bell, has reported disappointing figures for its second quarter earnings report. The company reported only $3.2 billion in sales, while they had expected to earn $3.26 billion. In addition, its shares missed their targeted 74 cents projected increase by a penny, as they reported their shares had gone up 73 cents in value. The stock is currently valued at around $82.71 a share.
Yum!’s figures are better than last year, improving by six percent in overall global sales while the operating profit increased by 32 percent. Still, Wall Street seemed to be disappointed as the stock’s value dropped 2.5 percent in after-hours trading. KFC’s overall sales have dropped 2 percent, and Pizza Hut sales declined by 4 percent. Taco Bell was the only restaurant to stay in the green, as new implementation of their breakfast menu gave a 2 percent increase in store sales.
Meanwhile, sales in China have given executives a reason to be happy. Sales grew by 15 percent and the margin at restaurants grew by over 6 percent. Chinese business accounted for more than half of Yum!’s sales, and the company opened 104 restaurants just this past year.
Yum!’s CEO David Novak said, as reported by Forbes, “We are especially pleased with the initial success of our KFC Menu Revamp and excited about our plans balance of year,” CEO David Novak said in a statement. “Overall, we remain on track to open at least 700 new restaurants in China as we further capitalize on the world’s largest and fastest growing consuming class.”
There is an expression that goes along the lines “adapt or die,” and it certainly seems that Yum! is adapting. Despite a declining U.S. interest in cheap and fattening chicken, pizza and tacos, Yum! still has a tremendous source of revenue over in the Far East. Consider Yum!’s reported losses as just a minor hiccup. They should be around for a long time to come.
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