Yum! Brands Inc.
) Chinese division, the largest contributor to its revenue
stream, posted another quarter of negative same-store sales
Comps at YUM! dipped 19% in May 2013 as a result of a 25% fall
in comps at its KFC brand. Adverse publicity arising from the
outbreak of the H7N9 Avian flu in early-April continues to affect
KFC's performance in the region. However, the rate of decline is
moderating, as evident form the fact that the decline in comps in
May was much less than the 29% reported for April.
Yum!'s Pizza Hut Casual Dining's comps were also up 12% in
China during the month under review, ahead of the April comps
growth of 5%.
Yum! has provided a sales outlook for its China division for
the second quarter of 2013 (March, April and May), results of
which are expected on Jul 10. According to the company, its China
division's comps will suffer a 20% decline in the second quarter
as against a 10% growth in the year-ago quarter. Quarterly
decline in comps would be the result of a 26% decline in KFC
comps, partially offset by a 7% increase in comps at Pizza Hut
China, which has played a crucial part in Yum!'s growth story
in the past few years, began to witness a setback since the
fourth quarter of 2012. An allegation regarding the quality of
chicken supplied to KFC in Dec 2012 and the outbreak of avian flu
in China in early-Apr 2013 were held primarily responsible for
the company's weak performance in China in the past few
Currently carrying a Zacks Rank #3 (Hold), Yum! is gradually
recovering from the downturn and might record positive same-store
sales in the fourth quarter of 2013. The company has issued
several aggressive quality assurance programs, marketing
campaigns and various promotional offers to boost its sales.
However, all of the company's brand awareness initiatives will
likely result in incremental expenses that will weigh on its
), also seems to be back on track after posting a dismal
performance so far in the year. Comps increased in May as the
company witnessed positive comps growth in all the three
geographical segments - U.S., Europe, and Asia/Pacific, Middle
East and Africa (APMEA). Menu-innovations, value-options and
breakfast offerings did the trick across the globe.
Other players in the restaurant industry, which look
attractive at current levels, include
The Wendy's Co
Burger King Worldwide Inc.
), both carrying a Zacks Rank #2 (Buy).
BURGER KING WWD (BKW): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
WENDYS CO/THE (WEN): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
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