Yum Brands (YUM) Q1 2022 Revenue

Vehicles are queuing to pass Yum! Brands Inc. Kentucky Fried Chicken (KFC) and Taco Bell restaurant in Lockport, Illinois, USA

Daniel Acker | Bloomberg | Getty Images

Yum Brands on Wednesday reported quarterly earnings and revenue that fell short of analysts’ expectations as restrictions in China weighed on sales.

The company also said it will miss its long-term operating profit target this year due to the suspension of its Russian business.

Here’s what the company said compared to what Wall Street expected, based on a survey of analysts at Refinitiv:

  • Earnings per share: $1.05 adjusted vs. $1.07 expected.
  • Revenue: $1.55 billion vs. $1.59 billion expected

Global same-store sales were up 3% QoQ.

Yum KFC reported a 3% increase in same-store sales over the period, but the company said that, excluding China, same-store sales actually grew 10%. China is the largest KFC market in terms of system-wide sales. StreetAccount estimated that Wall Street was expecting a 4.4% increase in same-store sales.

Similarly, China also influenced Pizza Hut’s results. The market is the second largest in the chain of pizzerias. It reported steady growth in same-store sales across global markets, including the US. Meanwhile, in international markets, same-store sales rose 5%, but excluding China, the figure rose 10%.

Chief Financial Officer Chris Turner said it is unclear when demand in China will recover.

Pizza Hut sales in the US also came under pressure. The chain said same-store sales in its home market were down 6%.

“We continue to see strong demand for the Pizza Hut business in the US, but the first challenge is filling it with driver-related labor issues,” Turner said on a company conference call with analysts.

Taco Bell was the only chain in Yum’s portfolio to report higher-than-expected same-store sales growth of 5% versus an expected 2.7%.

Yum opened 628 new locations during the quarter, most of which were KFC restaurants, while digital orders accounted for more than 40% of transactions and $6 billion in system-wide sales.

net sales rose 4% to $1.55 billion, falling short of expectations of $1.59 billion.

The company reported first-quarter net income of $399 million, or $1.36 per share, up from $326 million, or $1.07 per share, a year earlier.

Excluding earnings from refranchising, earnings from operations in Russia and other items, the company earned 1.05 cents per share, falling short of the $1.07 per share expected by analysts polled by Refinitiv.

Yum has pledged to donate the net profits from its Russian business to humanitarian aid following the Kremlin’s invasion of Ukraine. It has also temporarily closed company-owned KFC locations in Russia and is finalizing an agreement with its Russian franchisee to suspend Pizza Hut operations there. Russia accounted for about 2% of Yum’s system-wide sales in 2021 and has been a key market for new restaurant development.

Due to the exclusion of Russian profits, Yum said it would miss its long-term goal of high single-digit growth in its core operating profit. Instead, average single digit growth is expected in 2022.

Read the full earnings report here.

This is the latest news. Please stay tuned for updates.

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