News

Yum Brands Reports Lower Q4 Profits and Revenue

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Andrew R. Michaud

• February 07, 2024

Shares of Yum Brands Inc. experienced a 2.2% drop in premarket trades on Wednesday following the company's announcement of weaker-than-expected fourth-quarter profit and revenue.

Lower Net Income Compared to Prior Year

Yum Brands, the parent company of popular fast-food chains Taco Bell, Pizza Hut, and KFC, reported a net income of $463 million, or $1.62 per share, for the fourth quarter. This is in comparison to a net income of $371 million, or $1.29 per share, in the same quarter of the previous year. After adjusting for certain factors, such as fluctuations in quarterly tax rates, the adjusted earnings per share came down to $1.26, compared to $1.32 in the previous year's quarter. Unfortunately, this fell below the FactSet consensus of $1.40.

Revenue Rise Falls Short

While there was a marginal increase in revenue, rising by 1% to $2.04 billion from $2.02 billion in the same period last year, it fell short of analysts' expectations of $2.11 billion. Additionally, Yum Brands reported a modest 1% growth in same-store sales, significantly below the projected 3.7% growth.

Division Performance Variations

The KFC division saw a 2% increase in same-store sales during the fourth quarter. While this may seem positive, it pales in comparison to the 5% growth achieved in the prior year's quarter. Taco Bell experienced a similar decline in growth, with same-store sales increasing by only 3% compared to the previous year's impressive 11%. On the other hand, Pizza Hut struggled with a decline of 2% in same-store sales, quite a downturn from the 1% growth seen in the year-ago quarter.

Company's Expansion and Digital Advancements

Yum Brands highlighted its achievements throughout 2023, including the opening of a record-breaking 4,754 gross units. In addition, the company proudly announced significant progress in its proprietary digital and AI-driven ecosystem, developed in collaboration with franchisees. Looking ahead to 2024, Yum Brands expect to exceed 30,000 restaurants at KFC, 20,000 restaurants at Pizza Hut, and over 60,000 globally for the entire Yum portfolio.

Share Performance

Over the past 52 weeks, Yum Brands' shares have faced a decline of 3.2%, a stark contrast to the impressive 20.3% gain observed in the S&P 500 index.