UPDATE 1-Yum says key 4th-qtr sales in China to fall

Thu Nov 29, 2012 6:38pm EST

By Lisa Baertlein

Nov 29 (Reuters) - Yum Brands Inc said on Thursday that it expects a decline in fourth-quarter sales at established restaurants in China, where a cooling economy is making it difficult to exceed the 21 percent gain it had there a year earlier.

Yum, which gets more than half of its profits from China, said that fourth-quarter same-restaurant sales are expected to be down 4 percent in China, but they are expected to rise 4 percent at Yum Restaurants International and 3 percent in the United States.

Same-restaurant sales are a main gauge of performance for restaurant companies.

Shares of Yum, the parent of the KFC, Taco Bell and Pizza Hut chains, fell 6 percent to $69.98 in extended trading.

The last time Yum reported a decline in same-restaurant sales for China appears to have been in the fourth quarter of 2009, when those sales fell 3 percent in mainland China, according to Yum's financial reports.

Representatives for Yum did not immediately respond to requests for comment.

"For the fourth quarter, stronger-than-expected operating performance from Yum Restaurants International and our U.S. division is offsetting softer sales in China," Yum Chairman and Chief Executive David Novak said in a statement.

Yum expects to open at least 800 restaurants this year in China, where Novak said the company's prospects remain bright.

"Next year will be another strong year for our China division. We are extremely confident Yum China remains the best growth story in the restaurant industry," Novak said.

Yum also forecast 2013 earnings per share growth of at least 10 percent. It repeated its call for 2012 earnings per share growth of at least 13 percent, or $3.24 per share, excluding special items.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.