Yum Brands turned in a mixed second-quarter report on Wednesday, but the company did not offer any fresh information on how the cyclospora outbreak linked to Taco Bell restaurants is affecting operations. The quarter ended June 30, before the outbreak was tied to the chain, leaving the most immediate business impact outside the reported period.
According to the report, the Food and Drug Administration first connected the parasitic outbreak to iceberg lettuce served by Taco Bell in mid-July. Since then, daily traffic at Taco Bell locations has fallen by double-digit percentages, based on Placer.ai data. That raises questions for Yum, which has long described Taco Bell as a key growth driver. Executives were expected to face questions on the company’s earnings call about the sales slump and any possible effect on future results. Yum does not usually issue full-year or next-quarter guidance for same-store sales or earnings per share.
Quarterly performance was stronger than expected on profits, weaker on revenue
For the second quarter, Yum reported adjusted earnings of $1.62 per share, ahead of the $1.58 expected by analysts surveyed by LSEG. Revenue came in at $2.17 billion, slightly below the $2.2 billion consensus estimate. Net income rose to $853 million, or $3.08 per share, from $374 million, or $1.33 per share, a year earlier. Revenue increased 12%, helped by new restaurant openings, while global same-store sales rose 3%, close to StreetAccount’s estimate of 2.9%.
Performance across the company’s brands was uneven. Taco Bell same-store sales climbed 7% in the quarter, keeping its position as Yum’s strongest performer. KFC posted 2% same-store sales growth, and system sales in China, Yum’s largest market, increased 6%. Pizza Hut same-store sales fell 1%. Last month, Yum said it would sell the struggling pizza chain to LongRange Capital and Yum China for $2.7 billion.
Source: cnbc.com
