What is driving Yum China Holdings Inc (NYSE: YUMC) stock

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Yum China Holdings Inc (NYSE: YUMC), the exclusive licensee of the KFC, Pizza Hut and Taco Bell brands in China, stock rose over 3.4% on 29th April, 2020 (as of 11:47 am GMT-4; Source: Google finance) after the company posted better than expected results for the first quarter of FY 20 and the decline in same-store sales was slowing even as the vast majority of consumers are still avoiding going out in public to contain the spread of the coronavirus. Yum China has suspended its share repurchases and dividends for the next two quarters, due to the impact of the coronavirus outbreak and economic uncertainty. The company has reaffirmed its plans to open 800 to 850 new stores in the country in 2020. The Company had begun temporary store closures in late January where appropriate. About 35% of stores were closed by mid-February at the peak of the outbreak, with significant regional differences. As of the date of this release, about 99% of stores in China are either partially or fully open.

YUMC in the first quarter of FY 20 has reported the adjusted earnings per share of 16 cents, beating the analysts’ estimates for the adjusted loss per share of 25 cents. The company had reported 24 percent fall in the adjusted revenue to $1.75 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $1.56 billion. YUMC’s month-to-date same-stores sales had declined by more than 10%, which reflects an improvement from the 15% decline it experienced in the first quarter ended March 31. Digital orders, that also including delivery, mobile orders and kiosk orders, accounted for 84% of sales at KFC and 65% of sales at Pizza Hut in the first quarter, which reflects an increase of 29 and 36 percentage points, respectively, from a year earlier.

Moreover, during the first quarter of 2020, total system sales had fallen 20% year over year, along with 15% fall at KFC and 38% decline at Pizza Hut, excluding F/X. Same-store sales has decreased 15% year over year, along with an 11% fall at KFC and 31% fall at Pizza Hut, excluding F/X. The company’s restaurant margin has fallen to 10.7%, compared to 18.5% in the prior year period. Adjusted Operating Profit fell 67% year over year to $98 million for the period.

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