Tags: Yum | restaurant | China | Sales

Yum Brands Shares Fall on Weak China Sales Forecast

Friday, 30 Nov 2012 11:14 AM

 

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Shares of Yum! Brands Inc. tumbled 9.9 percent Friday after the owner of the Taco Bell and KFC fast-food chains said same-store sales in China will fall in the fourth quarter.

On the New York Stock Exchange, the shares sank $7.39 to end at $67.08, after trading as low as $66.73. Louisville, Kentucky-based Yum had advanced 26 percent this year through the close of regular trading Thursday.

Chief Executive Officer David Novak said same-store sales in China will decline 4 percent in the fourth quarter compared with a gain of 21 percent a year earlier. China, which accounted for 44 percent of Yum’s total revenue last year, is grappling with an economy where growth has slowed for seven quarters. Earlier this month, McDonald’s Corp. said same-store sales fell in China in October.

Yum said in a statement Thursday it will open at least 700 units in China next year, down from 800 in 2012.

Bryan Elliott, an analyst at Raymond James Financial Inc., downgraded the shares to underperform, the equivalent of a sell rating, calling the slowdown in China “shocking.” Analysts at Susquehanna Financial and UBS AG also reduced their ratings on the company.

Comparable-store sales are forecast to rise 4 percent in Yum’s international division and 3 percent in the U.S. in the fourth quarter. Yum has more than 38,000 restaurants worldwide.

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