(Adds details, background; updates shares)
Sept 3 Yum Brands Inc estimated
same-store sales in China fell about 13 percent in the third
quarter and continue to decline, hurt by a food safety scare in
late July when a former supplier was said to have used expired
The company's shares fell nearly 4 percent in trading after
the bell on Wednesday.
"Since July 21st, Yum Brands' China division has experienced
a significant, negative impact to sales at both KFC and Pizza
Hut following adverse publicity regarding improper food handling
practices by former supplier, Shanghai Husi," Yum said in a
"While sales are beginning to rebound, they continue to be
Yum, which gets more than half of its overall sales from
China, said it would provide an updated full-year earnings
forecast when it reported results for the third quarter ended
A few days after food scare Yum had warned that a sustained
impact on sales would "have a material effect on full-year
earnings per share".
Yum's sales at established restaurants in China increased 15
percent in the second quarter and the country accounted for
about 61 percent of its total sales in the period.
The food safety scare in China was triggered by a TV report
on July 20 that showed staff at the Shanghai Husi Food facility
using meat that had expired and had been lying on the floor.
Yum, which has nearly 6,400 restaurants in China, has since
cut its global ties with U.S. meat supplier OSI Group LLC
, the parent of Shanghai Husi.
Yum plans to "vigorously" pursue legal action against OSI
and Husi to recover damages from the incident, the company said
Yum, McDonald's Corp and coffee chain Starbucks Corp
are among the global brands that had pulled products
from their outlets in the country.
Yum's shares were at $68.73 in extended trading after
closing at $71.48 on Wednesday. Up to the close, the stock has
fallen 7.7 percent since the TV report.
(Reporting by Shailaja Sharma in Bangalore; Editing by Savio