Depressed China sales hurt Yum shares

By Time of article published Aug 14, 2013

Share this article:

Leslie Patton

New York - Yum Brands fell on Monday after the owner of the KFC and Pizza Hut chains posted July same-store sales in China that declined 13 percent, more than in June, as diners remained reluctant to eat chicken amid an outbreak of avian flu.

The shares slid 3.8 percent to $71.62 (R711) in late trading on Monday after closing little changed at $74.47 in New York.

Analysts had estimated a 7.1 percent drop in sales last month, according to the average of four projections compiled by Consensus Metrix. Sales at stores open at least 12 months fell 16 percent at KFC and rose 3 percent at Pizza Hut in the Asian nation, the company said in a filing on Monday.

Yum gets about 50 percent of its revenue from China, where it has about 5 980 KFC and Pizza Hut stores. China same-store sales fell 10 percent in June and 19 percent in May.

Sales at KFC were hurt by “residual effects of adverse publicity surrounding the December poultry supply incident,” Yum said. The company projects China comparable-store sales will be positive in the fourth quarter.

Last month Yum reported same-store sales in China declined 20 percent in the second quarter. It said earlier this year that it was improving safety and tightening standards for suppliers in China to help win back consumers after a probe into a former poultry provider hurt sales. It has also been airing television commercials there about the quality of its food and the safety of its supply chain and is advertising chicken alternatives, such as shrimp and mushroom rolls.

KFC “is continuing to recover from both avian flu and the poultry supply incident”, chief executive David Novak said last month.

The bird flu virus has sickened 131 people in China and killed 39. – Bloomberg

Share this article: