Business Intelligence on Retailing, Franchising, and Consumerism in China

China Takes Bite Out Of Yum!'s Second-Quarter Financial Results

Yum! Brands Inc. reported results for the second quarter ended June 15, 2013, and said its system sales declined 12% in China.

The owner of Pizza Hut, Taco Bell, and KFC, Yum's China Division sales and profits were significantly impacted by adverse publicity surrounding the Avian flu, as well as the residual effect of the December poultry supply incident.

The company's same-store sales declined 20% in China, and worldwide restaurant margin declined 2.7 percentage points to 12.5%, including a decline of 5.0 percentage points in China. Worldwide operating profit declined 20%, prior to foreign currency translation, including a 63% decline in China.

June same-store sales declined an estimated 10% for the China Division, improving from a 19% decline in May. This included an estimated decline of 13% at KFC and 6% growth at Pizza Hut Casual Dining. But Yum's China Division same-store sales are expected to continue to recover over the course of the year and be positive in the fourth quarter.

Yum also remains on track to open at least 700 new Pizza Hut units this year.

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