Yum China falls after Pizza Hut lags

Yum China Holdings Inc. fell after Pizza Hut comparable sales missed analysts’ estimates and the company said the coronavirus outbreak will “materially affect” this year’s profit and sales.
Same-store sales company-wide rose 2% in the fourth quarter, compared with analysts’ average 1.6% projection, according to Consensus Metrix. But that key measure was unchanged at Pizza Hut, trailing projections, and the company cited the virus along with commodity and labor inflation headwinds for this year.
“While it is difficult to fully ascertain the expected impact of the coronavirus outbreak at this time, we can reasonably expect it to materially affect our 2020 sales and profits,” Chief Financial Officer Andy Yeung said in a press release.
Yum China has temporarily shut down most KFC and Pizza Hut stores in Hubei Province, the center of the deadly coronavirus outbreak.
“Looking into 2020, the coronavirus outbreak is a major public health situation in China,” Chief Executive Officer Joey Wat said. For stores that remain open, reduced opening hours and fewer diners have slashed comparable sales.
Across China, the company has closed 30% of its restaurants, and doesn’t know when they will re-open. Yum China said it may have an operating loss in the first quarter, and that future operations including cash flows could be hurt due to the quickly spreading virus.
The company is facing more competition in the Chinese restaurant market as other international chains, like Burger King, Tim Hortons and Starbucks, quickly expand. Pizza Hut’s dine-in stores are struggling to attract consumers in a space increasingly dominated by to-go options. MDT/Bloomberg