Yum! Brands’ System Sales Increase, Profit Drops

Yum! Brands Inc., the owner of Pizza Hut, Taco Bell and KFC, posted on Thursday a lower profit for its second quarter due to weaker revenue. However, its systems sales as well as sales at same stores increased.

In addition, the company announced that it was maintaining its operating profit growth forecast for the full year.

CEO Greg Creed said that the company was pleased with the intensified focus on its four growth drivers that helped deliver a strong quarter.

He added that the company would maintain its full-year guidance for 2017 and continues with its transformation of multi-years in strategy that is designed to produce higher shareholder value.

For its second quarter, net income at Yum! was down 39% to end at $206 million compared to $336 million for the same period one year ago. Its continuing operations base experienced a decline of 23% in net income.

Adjusted per share earnings for the second quarter were 68 cents in comparison to last year during the same quarter of 56 cents.

On average, analysts were expecting earnings to be 61 cents per share during the quarter. Total revenues for the quarter were down 4% ending the quarter at $1.45 billion compared to $1.51 billion during the same three month period one year ago.

Company sales fell 10% from the same period last year to end the quarter at $900 million, while fees for franchise and licensing grew by 7% to just over $539 million.

During the quarter, revenue from KFC fell 1% ending the quarter at $770 million, while total revenue at Pizza Hut were down 17% ending the quarter at $222 million. Total revenue generated by Taco Bell was down 2% ending at $456 million.

Worldwide systems sales were up 6%, with Taco Bell and KFC up over 7%, while Pizza Hut was up 2%.

During pre-market trading, Yum! shares were off by 0.29%.

During April, CEO Creed announced that the company would be investing over $130 million in upgrading of equipment, improving technology at restaurants, and boosting its advertising through the end of 2018 at Pizza Hut locations.

For the most recent period, Yum posted a charge of $12 million related to the investments it is making at Pizza Hut locations. The company entered into a deal with its franchises during May for this effort that will improve its brand alignment and accelerate technology and operations improvements.

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