* China same-store sales drop 13 pct in March
* "Significant, negative impact" from bird flu-related news
* Shares down more than 2 pct after-hours
By Lisa Baertlein
April 10 KFC parent Yum Brands Inc
warned that a new bird flu outbreak in China badly hit
restaurant sales there this month, even as the company also
reported a sharper-than-expected slide in March sales in the
country caused by the lingering impact of a separate food safety
"Within the past week, publicity associated with Avian flu
in China has had a significant, negative impact on KFC sales,"
the company said in a regulatory filing on Wednesday.
Yum did not quantify the impact.
The bird flu outbreak has already sickened 33 and killed
nine, as Chinese authorities try to clamp down on rumors about
the deadly virus and its potential spread.
Yum reaps more than half its overall sales in China, where
most of its nearly 5,300 restaurants are KFCs. It was already
struggling in the country after chemical residue was found in a
small portion of its chicken supply late last year.
"This will set them back a little bit. If those (bird flu
casualty) numbers go up, then the impact could be longer," said
Edward Jones analyst Jack Russo.
Sales at Yum's China restaurants open at least one year fell
13 percent in March, more than the 10 percent average drop
expected by analysts polled by Consensus Matrix.
The March results included a 16 percent drop at KFC and a 4
percent rise at Pizza Hut.
The company plans to educate consumers, as it has done in
the past, that properly cooked chicken is safe to eat, Yum said
in Wednesday's filing.
In February, KFC's sales were flat in China, which had given
analysts some hope a turnaround was already taking hold.
While the March results were disappointing, they may show
that the effects of the timing shift of the all-important
Chinese New Year holiday on January and February were bigger
"I don't think we should interpret this, necessarily, as a
step back," Sanford Bernstein research analyst Sara Senatore
Yum shares fell more than 2 percent to $65.20 in extended
trading following the report. Yum's stock traded around $72 in
late March before reports of the first deaths from the novel
strain of avian flu.