Yum! Brands ( NYSE: YUM ) posted a mixed earnings result on Wednesday as issues in its international business tempered optimism on strong domestic sales at Taco Bell.
Shares of the Kentucky-based restaurant operator slid 1.33% shortly after Wednesday’s market open.
The restaurant chain posted narrow misses on top and bottom lines for the second quarter as net income dropped 40% from the prior year, exacerbated by currency headwinds and the sale of operations in Russia . The adverse results came despite a 1% increase in comparable sales, led by an 8% leap in same store sales at Taco Bell. The strength of sales for the new Mexican pizza offering at Taco Bell was credited with offsetting a 1% drop in comparable sales at KFC and 3% decline at Pizza Hut.
However, management noted that sans the issues in international market shifts, the results would have been far rosier.
“Our second quarter system sales grew 5% excluding Russia, driven by sustained development momentum,” CEO David Gibbs said. “We are pleased with the continued growth of our digital business with digital sales of nearly $6 billion, fueled by the adoption of our global platforms and capabilities.”
The company also indicated that it added 781 gross units during the second quarter resulting in 463 net-new units to help offset the removal of more than 1,100 units in Russia. The withdrawal from Russia was noted as the key component in KFC’s lagging sales as more than 1,000 KFC locations were removed from the market. Lockdowns in China were also cited as a significant headwind as the largest market by percentage of sales for the chain.
For the overall Yum! Brands ( YUM ) operation, worldwide same-store sales ex-China grew 6% during the quarter.
Read more on the results recently posted by Yum! China Holdings .
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Yum! Brands results hit by Russia withdrawal, China lockdowns