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Hmm! Brands lose revenue, Pizza Hut sales slow as Taco Bell and KFC drive growth

Hmm!  Brands lose revenue, Pizza Hut sales slow as Taco Bell and KFC drive growth


Pizza Hut’s lower sales took a chunk out of Yum! Brands (YUM) Third Quarter Earnings Results.

The fast-food conglomerate posted better earnings per share but no revenue, as it reported Wednesday morning before the market opened. Pizza Hut’s lackluster sales dragged down the numbers, but KFC and Taco Bell continue to boost Yum! sales. Brands (YUM).

Revenue came in below expectations at $1.71 billion, compared to estimates of $1.77 billion, while adjusted earnings per share came in at $1.44, ahead of Wall Street expectations of $1.27. .

In the third quarter, same-store sales rose 6%, led by KFC (up 6%) and Taco Bell (up 8%), both beating estimates. Chief Executive David Gibbs called the two brands “twin engines of growth… with KFC showing broad strength in both developed and emerging markets.”

The scrumptious chicken chain’s performance in China, where it makes a quarter of its sales, remains excellent. In the third quarter, total restaurant sales increased 16%, while in the US they remained stable. Chicken nuggets introduced last summer were a hit this quarter and the company plans to lean even further into boneless treats, Gibbs said on a call with investors.

Taco Bell remains strong in the U.S., as higher-income consumers opt for cheaper meals as wallets become tighter. “We’re seeing really consistent transaction growth of 2% to 3% across all income levels,” Gibbs said of the taco chain.

According to TD Cowen analyst Andrew Charles, the Volcano Menu, a retro 2000s menu item that returned to stores in June, may have helped boost orders, as it was the second most requested all-time. after the Mexican Pizza.

Pizza Hut was a disappointment, with same-store sales rising just 1% in the quarter, while the Habit Burger Grill division saw same-store sales decline by 5%.

So far this year, Yum! Brands are down almost 6%, compared to the S&P 500 (^GSPC) gain of 8.5%.

The earnings summary

Adjusted earnings per share: $1.44 vs. $1.27 expected

Revenue: $1.71 billion versus $1.77 billion expected came to fruition

Sales in the same store: 6% versus 4.93% expected

In the third quarter, the company added 1,130 new locations for its brands. Digital sales, a key component in driving loyalty programs, exceeded $7 billion in the quarter, representing 45% of total sales.

KFC's chicken nuggets help boost sales in third quarter.  Photo taken at KFC headquarters by Yahoo Finance's Brooke DiPalma.KFC's chicken nuggets help boost sales in third quarter.  Photo taken at KFC headquarters by Yahoo Finance's Brooke DiPalma.

KFC’s chicken nuggets help boost sales in third quarter. Photo taken at Yum! Brands Headquarters by Yahoo Finance’s Brooke DiPalma.

Before earnings, Baird analyst David E. Tarantino said Yum! Brands is “well positioned amid macroeconomic uncertainties,” in a note to clients.

He added that it “can sustain strong growth from franchisee-led units… which, combined with YUM’s strong portfolio of brands, should be resilient in a variety of economic scenarios.”

Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or email him at bdipalma@yahoofinance.com.

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