Yum Manufacturers on Thursday reported that international same-store gross sales fell 15% within the fiscal second quarter, led by plummeting gross
Yum Manufacturers on Thursday reported that international same-store gross sales fell 15% within the fiscal second quarter, led by plummeting gross sales throughout the KFC model, however the firm mentioned gross sales have begun to stabilize in its open areas.
Retailer closures peaked in early April, CEO David Gibbs mentioned on a convention name with analysts to debate earnings, including that the corporate has steadily reopened shops for curbside pickup or off-premise gross sales.
“Digital gross sales had been an enormous driver of the dramatic enchancment in gross sales from the preliminary affect of COVID-19, reaching an all-time excessive of $3.5 billion for the quarter, a rise of greater than $1 billion over the prior 12 months,” CEO David Gibbs mentioned in a press release. “Similar-store gross sales developments for open shops stabilized in June just some factors in need of flat … and these developments have continued into July.”
Yum Manufacturers shares had been down 2% in premarket buying and selling.
Here is what the corporate reported, in contrast with what Wall Avenue was anticipating based mostly on a survey of analysts by Refinitiv:
- Earnings per share: 82 cents, adjusted, vs. 54 cents anticipated
- Income: $1.2 billion, vs. $1.19 billion anticipated
Yum mentioned web revenue for the quarter ended June 30 was $206 billion, or 67 cents per share, down from $289 billion, or 92 cents per share, a 12 months earlier. The corporate’s minority stake in Grubhub favorably impacted earnings per share by 21 cents.
Web gross sales fell to $1.2 billion, down 8.5% in contrast with a 12 months earlier.
Greater than 95% of the corporate’s worldwide shops had been open in some capability by the tip of the quarter, Gibbs mentioned. Nonetheless, the corporate has about 24,000 eating rooms nonetheless closed throughout its portfolio, he mentioned. He added that “within the U.S., we actually simply have a fraction of our eating rooms open.”
“It is actually fairly spectacular that we had been in a position to get gross sales now globally again to approaching flat with out these eating rooms within the majority of our shops,” he mentioned.
KFC was the weakest performing division, with same-store gross sales down 21% within the quarter. Nonetheless, the fried rooster chain reported an 8% enhance in U.S. systemwide gross sales. It is the one area the place the chain reported a systemwide gross sales enhance in contrast with final 12 months. In China, which accounts for greater than 1 / 4 of the chain’s annual gross sales, the corporate reported a 6% lower in quarterly gross sales, excluding the affect of foreign money.
“We have got sure markets the place manufacturers are sturdy,” Gibbs mentioned on the decision. “After which we have different markets on the different finish of the spectrum the place there are nonetheless some closures and gross sales are nonetheless impacted by Covid.”
Pizza Hut, usually the laggard of Yum’s portfolio, reported a 9% drop in international same-store gross sales. Weak point in worldwide markets was offset by positive aspects within the U.S., the place same-store gross sales rose 5%.
Taking a look at systemwide gross sales, which exclude foreign money, gross sales rose 1% within the U.S., which accounts for 42% of Pizza Hut’s annual gross sales. Within the chain’s second largest market, China, the corporate mentioned systemwide gross sales fell 12%.
Gibbs mentioned that each KFC and Pizza Hut have confirmed resilient amid eating room closures, largely due to their “nice household meal options.” He added that carryout and curbside pickup are “high-margin enterprise” for franchisees and that he is optimistic concerning the subsequent six months for each manufacturers.
Taco Bell’s quarterly same-store gross sales dropped 8%. The corporate warned earlier this month that the chain’s U.S. same-store gross sales had declined by high-single digits up to now within the quarter, though they turned constructive from the tip of April by Might.
“Taco Bell was a vivid spot on the quarter,” Gibbs mentioned, including that Taco Bell was “impacted probably the most” of the corporate’s manufacturers due to the hit to their late-night and breakfast choices. “They had been those in some methods within the U.S. who had been in dire straits, however rapidly partnered with franchisees … to get the enterprise on far more stable footing.”
Chris Turner, chief monetary officer of Yum Manufacturers, added that some eating places which have briefly closed might need to completely closed. He mentioned the corporate is supporting franchisees by offering cost deferral choices and royalty grace durations.
Turner additionally introduced that the corporate is ending its suspension of the share repurchase program. He added that Yum remains to be not providing a forecast as a consequence of uncertainty across the coronavirus pandemic.
Yum had $1.24 billion in money and money equivalents readily available as of June 30. Turner added that the corporate has begun to repay on its revolver withdrawals.
Yum is attempting to get well after a lot of its shops had been shuttered as a consequence of authorities responses to the coronavirus pandemic. At one level, 11,000 Yum areas had been closed as a result of pandemic, representing greater than a fifth of its complete restaurant base.
With coronavirus instances surging once more throughout giant swaths of the U.S., prompting some native and state officers to roll again reopening efforts, Yum has continued to battle to navigate the general public well being disaster.
— CNBC’s Amelia Lucas contributed to this report.