Yum! Brands, Inc. (NYSE:YUM) stock rose 0.81% (As on February 9, 11:29:23 AM UTC-4, Source: Google Finance) after the company reported quarterly earnings and revenue that topped analysts’ expectations, fueled by strong same-store sales growth at Taco Bell. Yum reported fourth-quarter net income of $371 million, up from $330 million, a year earlier.
YUM in the fourth quarter of FY 22 has reported the adjusted earnings per share of $1.31, beating the analysts’ estimates for the adjusted earnings per share of $1.26. The company had reported the adjusted revenue growth of 7 percent to $2.02 billion in the fourth quarter of FY 22, beating the analysts’ estimates for revenue of $1.92 billion. The company’s global same-store sales increased 6%, driven by diners’ strong appetite for Taco Bell.
Taco Bell, which is typically the strongest performer in Yum’s portfolio, reported same-store sales growth of 11%, beating StreetAccount estimates of 6.7%. The chain attracted customers through a mix of higher-price menu items and value offerings. KFC fell short of Wall Street’s expectations as weak performance in China weighed on its results. The fried chicken chain reported same-store sales growth of 5%, just shy of estimates of 5.4%. Excluding China, its largest market, KFC’s same-store sales increased 9%. Weak sales in China also hurt Pizza Hut’s fourth-quarter performance. The pizza chain’s overall same-store sales ticked up 1%, but its international same-store sales fell by 1%. Pizza Hut’s U.S. same-store sales rose 4%, a sign that consumers have recovered from last year’s pizza fatigue after over-ordering pies during Covid lockdowns.
In addition, the Habit Burger Grill, Yum’s latest addition, said sales at locations open at least a year shrank 1% in the quarter. However, its system sales, which tracks transactions at all of the chain’s restaurants rather than at only locations that have been open 12 months, climbed 12%, thanks to Yum’s rapid expansion of the chain.
On the other hand, as previously announced, Yum! entered into a sale and purchase agreement to transfer ownership of the Russian KFC restaurants, operating system and master franchise rights, including the network of KFC franchised restaurants, to Smart Service Ltd., a business operated by one of the existing KFC franchisees in Russia. Under the agreement, the buyer will be responsible for rebranding locations to a non-Yum! concept and retaining employees in Russia. Completion of the transaction is subject to regulatory and governmental approvals, as well as other conditions. Following the completion of the transaction, the company will have ceased the corporate presence in Russia.