November sales in China's KFCs fail to grow, Yum says
Yum Brands said sales at established KFC restaurants on the mainland, its top market, failed to grow last month despite a successful half-priced chicken promotion, and it forecast a return to earnings per share growth next year.
The mainland accounts for more than half of Yum's operating profit. Its shares have risen 14 per cent since the start of last month on expectations that mainland KFC restaurant sales are poised for a rebound.
The results released on Monday put a chill on such hopes, sending shares in the fast-food chain operator down 2.8 per cent to US$75.52 in extended trading.
Yum's overall mainland same-restaurant sales rose 1 per cent last month, including flat sales at KFC and a gain of 7 per cent at Pizza Hut Casual Dining.
Yum is the biggest Western restaurant operator on the mainland and the company had almost 4,500 KFC outlets there at the end of its third quarter.
The limited-time half-priced bucket promotion yielded a rise of about 16 per cent in KFC same-restaurant sales for the first 10 days of last month.
Yum forecast at least 20 per cent growth in next year's earnings per share, excluding special items.
Bernstein Research analyst Sara Senatore estimated earnings of US$3.48 per share, which implies 21 per cent growth over this year.
"We expect to have a strong bounce-back in 2014 following a year that is clearly below our high expectations," chief executive David Novak said.
Yum's mainland business took a dive after China Central Television in December last year reported that a few poultry farmers doing business with Yum suppliers fed their chickens excessive levels of antibiotics but no case was brought against Yum.