Skip navigation

Yum 3rd-Q profit climbs 17 percent; domestic comps lag

LOUISVILLE Ky. Yum! Brands Inc., reporting a third-quarter year-over-year profit jump of 17 percent, continued its pattern of strong international results fueled by business in China, which helped to compensate for domestic weakness.

The parent of the Taco Bell, Pizza Hut and KFC brands blamed its lagging U.S. performance — which included modest gains of 1 percent in both same-store sales and operating profit — on Taco Bell’s slow recovery from highly publicized disasters that included an E. coli outbreak at some units last year and a televised rat infestation in a New York City co-branded unit. Third-quarter same-store sales at U.S. Taco Bells fell 6 percent, which led to a U.S. systemwide blended-brand same-store sales uptick of just 1 percent, the company reported.

David Novak, chairman and chief executive of Yum, said he expects both improved Taco Bell results and U.S. profit growth in the fourth quarter. Domestic recovery, along with continued strong international results, should lead to full-year profit of $1.65 per share, the company said. That estimate was increased from previous guidance of annual profit totaling $1.63 per share. In fiscal 2006, Yum earned $1.46 per share, after adjusting for the company’s two-for-one stock split in June.

The company’s net income for its latest quarter ended Sept. 8 rose to $270 million, or 50 cents per share, from $230 million, or 42 cents per share, in the same quarter a year ago. Total revenue rose 13 percent to $2.56 billion. Analysts’ consensus forecast was for per-share profit of 45 cents on revenue of $2.44 billion.

Worldwide same-store sales increased 4 percent, including 11 percent growth in mainland China and 7 percent in the company’s International Division, which encompasses foreign locations outside of China, Thailand and Taiwan. Restaurant unit growth totaled 20 percent in mainland China, compared with an average of 4 percent in other foreign markets.

Yum operates, franchises or licenses 34,917 restaurants worldwide.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.