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Yum China (YUMC) Q2 Earnings and Revenues Beat Estimates
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Yum China Holdings, Inc. (YUMC - Free Report) reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate for the second straight quarter. The top line and the bottom line increased on a year-over-year basis.
The upside can be attributed to robust same-store sales growth and new unit contribution.
Earnings & Revenue Discussion
In second-quarter 2023, the company reported adjusted earnings of 47 cents per share, beating the Zacks Consensus Estimate of 39 cents by 20.5%. The bottom line increased 135% from 20 cents reported in the year-ago quarter.
Quarterly revenues of $2,654 million beat the consensus mark of $2,643 million. The top line rose 25% on a year-over-year basis. Excluding foreign currency translation, revenues increased 32% year over year.
Total system sales grew 32% year over year. System sales at KFC and Pizza Hut increased 32% and 30% (excluding foreign currency translation), respectively.
Same-store sales rose 15% year over year. The upside was primarily driven by an increase of 15% and 13% (excluding foreign currency translation) at KFC and Pizza Hut, respectively. Our model precited the metric to increase 6% year over year.
Operating Highlights
In second-quarter 2023, total costs and expenses amounted to $2,397 million, up 17% from the $2,047 million reported in the prior-year quarter. Our model precited the metric to increase 21.4% year over year.
The restaurant margin was 16.1% compared with 12.1% in the prior-year quarter. The upside primarily resulted from sales leveraging and cost structure rebasing. Our model estimated restaurant margin to be at 12.8%.
In the quarter, the adjusted operating profit totaled $259 million compared with $82 million in the prior-year quarter. Adjusted net income amounted to $199 million compared with $84 million in the prior-year quarter.
Balance Sheet
As of Jun 30, cash and cash equivalents were $1,189 million compared with $1,130 million as of Dec 31, 2022. Inventories were $396 million compared with $417 million in the previous quarter.
In the second quarter, YUMC repurchased nearly 1 million shares at an average price of $60.23 per share. As of Jun 30, the company had $1 billion available for the buyback program.
Management declared a quarterly cash dividend of 13 cents per common share. The dividend will be payable on Sep 18 to shareholders of record as of Aug 28.
Unit Development and Other Updates
In second-quarter 2023, Yum China opened 422 net new stores for developing KFC and Pizza Hut brands. As of Jun 30, the total restaurant count reached 13,602.
In the quarter under review, Yum China’s delivery contributed nearly 35% to KFC and Pizza Hut's company sales.
Digital orders contributed 90% to KFC and Pizza Hut's company sales compared with 89% in the previous-year quarter. Loyalty programs of KFC and Pizza Hut led to year-over-year growth by increasing to more than 445 million members.
Retained 2023 Outlook
Yum China reaffirmed its 2023 view. Management expects to open 1,100-1,300 stores. It anticipates solid expansion related to KFC and Pizza Hut stores along with growth of same-store sales. Capital expenditure in 2023 is anticipated to be $700-$900 million.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates a rise of 17% and 29%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 480.6%, on average. Shares of ANF have increased by 126% in the past year.
The Zacks Consensus Estimate for ANF’s 2024 sales and EPS indicate an increase of 3.4% and 732%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 121.2%, on average. Shares of BJRI have increased 62.4% in the past year.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.5% and 405.9% growth, respectively, from the year-ago period’s levels.
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Yum China (YUMC) Q2 Earnings and Revenues Beat Estimates
Yum China Holdings, Inc. (YUMC - Free Report) reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate for the second straight quarter. The top line and the bottom line increased on a year-over-year basis.
The upside can be attributed to robust same-store sales growth and new unit contribution.
Earnings & Revenue Discussion
In second-quarter 2023, the company reported adjusted earnings of 47 cents per share, beating the Zacks Consensus Estimate of 39 cents by 20.5%. The bottom line increased 135% from 20 cents reported in the year-ago quarter.
Yum China Price, Consensus and EPS Surprise
Yum China price-consensus-eps-surprise-chart | Yum China Quote
Quarterly revenues of $2,654 million beat the consensus mark of $2,643 million. The top line rose 25% on a year-over-year basis. Excluding foreign currency translation, revenues increased 32% year over year.
Total system sales grew 32% year over year. System sales at KFC and Pizza Hut increased 32% and 30% (excluding foreign currency translation), respectively.
Same-store sales rose 15% year over year. The upside was primarily driven by an increase of 15% and 13% (excluding foreign currency translation) at KFC and Pizza Hut, respectively. Our model precited the metric to increase 6% year over year.
Operating Highlights
In second-quarter 2023, total costs and expenses amounted to $2,397 million, up 17% from the $2,047 million reported in the prior-year quarter. Our model precited the metric to increase 21.4% year over year.
The restaurant margin was 16.1% compared with 12.1% in the prior-year quarter. The upside primarily resulted from sales leveraging and cost structure rebasing. Our model estimated restaurant margin to be at 12.8%.
In the quarter, the adjusted operating profit totaled $259 million compared with $82 million in the prior-year quarter. Adjusted net income amounted to $199 million compared with $84 million in the prior-year quarter.
Balance Sheet
As of Jun 30, cash and cash equivalents were $1,189 million compared with $1,130 million as of Dec 31, 2022. Inventories were $396 million compared with $417 million in the previous quarter.
In the second quarter, YUMC repurchased nearly 1 million shares at an average price of $60.23 per share. As of Jun 30, the company had $1 billion available for the buyback program.
Management declared a quarterly cash dividend of 13 cents per common share. The dividend will be payable on Sep 18 to shareholders of record as of Aug 28.
Unit Development and Other Updates
In second-quarter 2023, Yum China opened 422 net new stores for developing KFC and Pizza Hut brands. As of Jun 30, the total restaurant count reached 13,602.
In the quarter under review, Yum China’s delivery contributed nearly 35% to KFC and Pizza Hut's company sales.
Digital orders contributed 90% to KFC and Pizza Hut's company sales compared with 89% in the previous-year quarter. Loyalty programs of KFC and Pizza Hut led to year-over-year growth by increasing to more than 445 million members.
Retained 2023 Outlook
Yum China reaffirmed its 2023 view. Management expects to open 1,100-1,300 stores. It anticipates solid expansion related to KFC and Pizza Hut stores along with growth of same-store sales. Capital expenditure in 2023 is anticipated to be $700-$900 million.
Zacks Rank & Key Picks
Yum China sports a Zacks Rank #4 (Sell).
Some top-ranked stocks from the Zacks Retail and Wholesale sector are:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy).
PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 17.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates a rise of 17% and 29%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 480.6%, on average. Shares of ANF have increased by 126% in the past year.
The Zacks Consensus Estimate for ANF’s 2024 sales and EPS indicate an increase of 3.4% and 732%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 121.2%, on average. Shares of BJRI have increased 62.4% in the past year.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.5% and 405.9% growth, respectively, from the year-ago period’s levels.