Prime Highlights:
Yum Brands exceeded Wall Street expectations for both earnings and revenue in the fourth quarter.
Adjusted earnings per share (EPS) were $1.61, slightly above the forecast of $1.60.
Revenue reached $2.36 billion, surpassing the expected $2.35 billion.
Key Background:
Yum Brands reported stronger-than-expected fourth-quarter earnings and revenue on Thursday, driven by robust sales from Taco Bell and international KFC operations. The company’s positive results led to a 7% rise in its stock price during morning trading.
For the quarter, Yum Brands posted adjusted earnings per share (EPS) of $1.61, surpassing analysts’ expectations of $1.60. Revenue reached $2.36 billion, slightly edging out the forecast of $2.35 billion. However, the company’s net income decreased to $423 million, or $1.49 per share, from $463 million, or $1.62 per share, in the same period last year.
Yum’s same-store sales increased by 1%, bolstered by a 5% rise in Taco Bell’s sales. Taco Bell’s strong value perception continues to resonate with consumers, contributing significantly to the company’s overall performance. KFC’s same-store sales remained flat, though international markets performed well, with China leading with a 5% increase. Europe and Latin America also showed double-digit growth in system sales. On the other hand, KFC’s U.S. same-store sales declined by 5%, as competition from rivals such as Popeyes and Raising Cane’s intensified.
Pizza Hut, the underperforming brand in Yum’s portfolio, saw a 1% decline in same-store sales. The U.S. market reported a 2% drop, while international sales remained flat. CEO David Gibbs acknowledged the pressure from value-driven competition and emphasized the need for more aggressive promotional strategies to attract customers.
During the quarter, Yum Brands opened 1,804 new restaurants, expanding its footprint by 5%. The company also highlighted its investment in technology with the rollout of Byte, an AI-driven software aimed at improving the customer experience and simplifying kitchen operations across its brands. Yum’s focus on digital sales was also evident, with more than half of its quarterly sales coming from online, delivery, and in-store kiosk orders, signaling a strategic move towards tech-driven growth.
