You wouldn’t think fried chicken would be a huge hit in China. But last night, KFC parent Yum! Brands
Total revenue jumped to $3.3 billion from last year’s $2.9 billion, representing a 14% rise. Earnings per share excluding special items came in at $0.83, with Yum! CEO David Novak saying, “I’m pleased to report EPS growth of 13% in the third quarter, excluding special items. As a result of strong performance in China and other emerging markets, we confidently reaffirm our full-year EPS growth forecast of at least 12%.”
Same-store sales in China jumped an impressive 19% while domestic comps dropped 3%. The company also saw its operating profit positively impacted by foreign currency translations to the tune of $32 million. A total of 331 new restaurants were opened throughout the quarter, including 138 in China. There are now 4,187 Yum!-branded restaurants in China, with 83% of them being KFC and the rest Pizza Hut.
Yum!’s stateside performance has been relatively lackluster, with domestic profits falling 16%. It’s no wonder that the company has been focusing heavily overseas. The company is one of the better China plays.
Yum! has a much more prominent presence in China than such Western competitors as McDonald's
Recent economic data have sparked some fears that China’s growth may be cooling off, which could reduce the pricing power that Yum! enjoyed during the last quarter as it raised prices to offset higher costs. If China’s growth continues to slow, Chinese locals may opt out of take out.
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Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Yum! Brands and Starbucks. Motley Fool newsletter services have recommended buying shares of Yum! Brands, McDonald's, Country Style Cooking Restaurant Chain, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.