YUMC - Yum China stock slips as sales fall short of expectations

Yum China ( NYSE: YUMC ) shares slipped on Wednesday as quarterly revenue came up short of expectations.

For the fourth quarter, an adjusted EPS report of $0.13 met expectations. However, an 8.7% decline in revenue from the prior year to $2.09B missed estimates by $220M.  Total system sales decreased 4% from the prior year, led by a 6% drop in Pizza Hut sales. The results were hampered by sporadic enforcement of pandemic restrictions, management explained.

“In late November, due to rising infections and strict COVID-related health measures, the number of stores that were either temporarily closed or offer only takeaway and delivery services, reached a peak of over 4,300 stores,” CFO Andy Yeung said. “In December, we faced a different situation where most of the COVID measures were lifted. Due to labor shortage, we had to temporarily close or provide limited services at over 1,300 stores on average.”

However, CEO Joey Wat remained optimistic on the prospects for 2023 as the government shifts toward reopening. For example, he told analysts on Tuesday that same-store sales benefited from pent-up demand over the course of the Chinese New Year holiday.

“Looking ahead, we are encouraged by the new COVID policy. The future indeed looks bright. But we must keep a level head and recognize that uncertainties and challenges still lie ahead,” Wat said. “Our country has shown that further outbreaks in the emergence of new COVID variants will pass after COVID restrictions are lifted. We also face macroeconomic headwinds such as elevated commodity and wage inflation as well as softening global economic conditions. These factors may impact our operations and consumer spending in China.”

Shares of the Chinese restaurant operator fell 3.05% in premarket trading.

Dig into the details of the quarter .

For further details see: