Yum Manufacturers on Thursday reported that world 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 places.
Retailer closures peaked in early April, CEO David Gibbs mentioned on a convention name with analysts to debate earnings, including that the corporate has regularly reopened shops for curbside pickup or off-premise gross sales.
“Digital gross sales have been an enormous driver of the dramatic enchancment in gross sales from the preliminary impression 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 an announcement. “Identical-store gross sales tendencies for open shops stabilized in June just some factors wanting flat … and these tendencies have continued into July.”
Yum Manufacturers shares have been down 2% in premarket buying and selling.
This is what the corporate reported, in contrast with what Wall Road was anticipating primarily based 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 earnings 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 have been open in some capability by the top 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 have been capable of 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% improve in U.S. systemwide gross sales. It is the one area the place the chain reported a systemwide gross sales improve 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 impression of foreign money.
“We have sure markets the place manufacturers are robust,” 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 world same-store gross sales. Weak point in worldwide markets was offset by positive factors within the U.S., the place same-store gross sales rose 5%.
Pizza Hut’s systemwide gross sales, which exclude foreign money, gross sales rose 1% within the U.S., which accounts for 42% of the chain’s annual gross sales. Within the chain’s second greatest 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 in regards to 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 to date within the quarter, though they turned constructive from the top of April by means of Could.
“Taco Bell was a brilliant 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 have been those in some methods within the U.S. who have been in dire straits, however shortly partnered with franchisees … to get the enterprise on far more strong footing.”
Chris Turner, chief monetary officer of Yum Manufacturers, added that some eating places which have quickly closed may 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 continues to be not providing a forecast as a result 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 lots of its shops have been shuttered as a result of authorities responses to the coronavirus pandemic. At one level, 11,000 Yum places have been closed because of the pandemic, representing greater than a fifth of its whole 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 wrestle to navigate the general public well being disaster.
— CNBC’s Amelia Lucas contributed to this report.