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Yum China Reports Tasty Q1 2021 Results - Motley Fool

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Without the negative impact of the COVID-19 pandemic to hold it back at this year's beginning, Yum China Holdings (NYSE:YUMC) reported improved results for the first quarter of 2021. The Shanghai-based fast-casual company -- a spinoff from Yum! Brands (NYSE:YUM) that holds franchises for Pizza Hut, Taco Bell, and KFC, along with a number of regional brands -- beat analyst expectations at both the top and bottom lines.

According to reports aggregating the consensus estimates of multiple Wall Street analysts, Yum China registered a 6.2% positive surprise, $150 million above the predicted $2.41 billion in sales. The actual revenue of $2.56 billion surged 46.3% year over year, without the pandemic causing a dining shutdown as was the case in early 2020. Adjusted earnings per share, or EPS, came in at $0.54, surpassing the forecast of $0.44 EPS for a 22.7% positive surprise.

A gold Yuan symbol sitting atop a rising stock market bar graph.

Image source: Getty Images.

With growth "driven by lower commodity prices and productivity gains" along with far fewer restaurant closures and generally improved conditions, Yum China said in its press release that same-store sales rose 10% overall year over year. Pizza Hut saw the biggest same-store sales increase (38%), while a 5% rise occurred at KFC.

CEO Joey Wat says Yum China is taking measures designed to "accelerate our growth in the years ahead," which include strengthening its supply chain, integrating more automation and digital into its processes, and acquiring a 5% stake in its most important chicken supplier. Digital orders at Pizza Hut and KFC accounted for 84% of sales during Q1, while delivery orders added up to 29% of the total. The switch to digital and the growing use of ordering kiosks mirrors Yum! Brands' recent opening of its first American digital-only Taco Bell in Times Square. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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