Yum Brands earnings beat estimates, but cyclospora outbreak weighs on Taco Bell

Summary

• Yum Brands reported fiscal third-quarter earnings per share of $1.56 adjusted, beating the $1.49 analyst expectation, while revenue matched expectations at $2.05 billion.
• Net income for the quarter rose to $1.62 billion, or $5.92 per share, compared to $397 million, or $1.41 per share, in the prior year.
• Net sales increased 4% to $2.05 billion, though same-store sales excluding Pizza Hut remained flat due to a 4% decline at Taco Bell.
• A cyclospora outbreak linked to iceberg lettuce at Taco Bell caused a temporary dip in U.S. same-store sales, which declined 4% during the quarter.
• Taco Bell U.S. same-store sales grew approximately 1% in the fourth quarter, with a 3% increase recorded in the last four weeks ended Friday.
• Yum completed the divestiture of Pizza Hut, selling the mainland China business to Yum China on Aug. 7 and the remainder to LongRange Capital on Sept. 1.
• Taco Bell's most loyal customers returned quickly following the outbreak, aided by weekly Tuesday deals for loyalty program members.
• Traffic from medium and light customers at Taco Bell recovered to about 95% of prior levels, while heavy user visits returned to normal.
• Taco Bell's international business reported 5% same-store sales growth outside the U.S.
• KFC U.S. same-store sales decreased 6%, while global KFC same-store sales increased 1% driven by growth in China and Europe.
• KFC U.S. launched popcorn chicken, which sold out in many locations, but the item did not offset the impact of the previous year's Hot & Spicy Wings and Potato Wedges promotion.
• KFC plans to roll out buzzy promotions, a new brand identity, and an expanded menu with upgraded sauces and beverages to modernize the brand globally.