Yum China Holdings, Inc. (NYSE: YUMC) on Wednesday reported second quarter sales that missed analysts’ estimate, due to a slower growth in its Pizza Hut chain.
The firm, which operates KFC, Pizza Hut and Taco Bell in China, said second-quarter sales fell 0.4 percent to $1.59 billion. Analysts polled by Thomson Reuters had estimated sales of $1.60 billion.
Net income rose to $107 million, or 27 cents per share in the quarter ended May 31, compared with $77 million, or 21 cents per share, a year earlier.
"I am pleased with our overall performance during the quarter, with same-store sales up 3% and system sales up 7%, on the back of continued strength at KFC. Operating profit, restaurant margin and net income all showed robust improvement." said Micky Pant, CEO.
Same-store sales, an important performance indicator for a retail chain, rose 3 percent in the second quarter, driven by strong growth at its fried chicken chain KFC. But the sluggish growth in Pizza Hut chain offset the overall growth.
Yum China shares fell as much as 13 percent to $34.90 in the early trading in New York. The stock has gained 46 percent this year before today’s decline.
Yum China spun off from Yum Brands Inc last year, aiming to focus on expanding in the world’s second largest economy. The firm now is operating more than 7,685 outlets in China.
"We are committed to building one of the world's leading restaurant companies, and are executing against a plan that we have developed towards this goal. We are making progress in the key themes we are investing in – loyalty programs, digital and delivery capabilities, and continued upgrade of restaurant assets and optimization of store formats.” CEO said.