Feb 4 KFC parent Yum Brands Inc said it
is monitoring the return of bird flu in its top market of China,
and while it has not seen a meaningful impact on national sales,
hard hit areas have experienced some softening in demand.
"Same-store sales results haven't been quite as strong in
some of the areas where reported cases of flu have been more
pronounced," Yum Chief Financial Officer Patrick Grismer said on
Tuesday on a conference call with analysts.
State news agency Xinhua said on Feb. 3 the country has
reported more than 100 human H7N9 avian flu cases this year,
including over 20 deaths, with Zhejiang and Guangdong provinces
"As you would expect, we're monitoring the situation
closely," Grismer said.
Yum gets more than half of its overall sales in China, where
most of its more than 6,200 restaurants are KFCs.
Yum on Monday reported better-than-expected fourth-quarter
earnings, even as China sales at established restaurants fell 4
percent, a figure including an estimated decline of 4 percent at
KFC and 5 percent growth at Pizza Hut Casual Dining.
The fast-food company has been fighting to boost consistent
sales growth in China, where a food safety scare and the first
wave of the H7N9 avian flu outbreak hurt sales last year.
"It's early days and we don't know what we don't know,"
David Novak, Yum's chairman and chief executive, said of the
resurgent avian flu in China. "Right now, we're just not seeing
Novak said 2014 would be a strong bounce-back year for Yum,
and repeated the company's forecast for earnings per share
growth of at least 20 percent this year. Investors betting on
Yum's comeback sent shares up 8.3 percent to $71.66 in trading
on the New York Stock Exchange.
During the company's earnings conference call, analysts
repeatedly pressed executives for more details on the potential
for bird flu to again depress Yum's China sales and to further
delay its recovery there.
In particular, they noted that Yum China chicken supplier
Tyson Foods Inc on Friday said concern about the return
of avian flu in China threatens to further hamper demand, which
is still weak due to a softening economy, food safety concerns
and bird flu.
Tyson said demand for chicken is down as much as 30 percent
in China, resulting in a substantial oversupply of chicken.
Yum executives said Tyson is among its roughly 30 chicken
suppliers in China and declined to respond to that company's