LOUISVILLE, Ky. — Yum! Brands Inc., parent company of Taco Bell, KFC, Pizza Hut, Long John Silver's and A&W, has reported that same store sales were up only slightly and net income was down 14 percent for the first quarter, ending March 21.
Yum! Restaurants International led the comps growth with an increase of 6 percent, followed by a 1 percent increase in mainland China, both of which were impacted by the foreign currency exchange. U.S. comps were down 2 percent due to weakness at KFC and Pizza Hut. Comps were also impacted in February due to 2008 being a leap year.
Total revenues for the quarter were down 8 percent at $2.2 billion, compared to $2.4 billion in the same period last year.
Net income for the quarter was off 14 percent at $218 million, compared to $254 million in the same period last year.
Yum! Brands reduced its company ownership of its U.S. restaurants by 18 percent as part of its plan to refranchise 500 units in 2009.
2nd quarter projections
Yum! Brands has announced that it expects its second quarter results likely will be the low point of the year due to:
- Continued negative impact of foreign currency translation on YRI's operating profit above the first quarter level, or nearly $25 million.
- Anticipated increase in year-over-year closure and impairment expenses driven by the lap of last year's gain of over $10 million from property sales and lease terminations. In 2009, some minor closure expenses and the potential for an increase in impairment charges is expected.
- Negative impact of international refranchising gain/loss of about $5 million versus last year.
- The lap of China's best quarterly performance of 2008 with very strong mainland China same-store-sales growth of 14 percent and China Division profit growth of 38 percent.
For the year, the company expects a 10 percent growth in earnings per share, excluding special items.
Industry trends
According to the NPD Group's Consumer Reports on Eating Share Trends (CREST), which tracks consumer usage of commercial foodservice, customer counts at quick-service restaurants declined by 1 percent this winter, the first loss for the QSR segment since winter 2003. This follows stable customer counts in the fall.
Consumers continued to cut back most on visiting commercial foodservice for supper, the daypart with the steepest decline this quarter. At the same time, traffic trends at lunch turned negative, the report said.
Conference call
Yum! Brands' conference call of its financial performance and strategies will be available for playback beginning at 12 p.m. Eastern time April 23 through 12 a.m. May 15. To access the playback, dial (800) 642-1687 in the United States and (706) 645-9291 internationally. The playback pass code is 94762032. The webcast and the playback can be accessed via the Internet by visiting Yum! Brands' Web site www.yum.com/investors and selecting Q1 2009 Earnings Call.
