LOUISVILLE, KY – Ongoing volatility in China and a strong dollar led Yum! Brands to adjust its earnings guidance for the full year.
Yum! said same-store sales in its China Division continue to challenge the company. For the full year, the company expects same-store sales to be low-single-digit negative, while operating profit for the division is forecast to be flat compared to a year ago, excluding the impact of foreign exchange. Same-store sales for the fourth quarter could range from flat to 4%, with positive sales growth at KFC and negative same-store sales at Pizza Hut Casual Dining.
“Compared to our outlook as of our second-quarter earnings release, we now expect incremental foreign exchange headwinds to negatively impact our full-year e.p.s. growth rate by one to two percentage points,” the company said in a statement. “Combining this with the revised China sales trends outlined above, we now expect our e.p.s. growth, prior to special Items, to range from about flat to low-single-digit positive for the full year.”
The company plans to report monthly same-store sales trends for its China Division beginning with October through the end of the year. Estimated same-store sales for October will be released Nov. 12.
In other Yum! Brands news, Keith Meister joined the company’s board of directors. Mr. Meister is founder and managing partner of Corvex Management L.P., an investment fund. Corvex is Yum! Brands’ largest shareholder with 5% of the company’s shares.“We have had a constructive dialogue with the Board and management over the last several months,” Mr. Meister said. “This is a company with multiple avenues for unlocking significant long-term value, and I look forward to working with the board and management to expeditiously finalize a plan that we believe can deliver that value to shareholders.”