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Yum! Brands Expects Coronavirus to Mar Q2 Sales More Than Q1
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Yum! Brands, Inc. (YUM - Free Report) recently provided an update on impact of the coronavirus pandemic on its business, which has put major cities under lockdown. The company’s both first and second-quarter 2020 will be impacted by the coronavirus outbreak.
The company announced that it has witnessed sales recovery in those markets where coronavirus impacted first. However, the company stated that continued improvement cannot be guaranteed. As of now, the company expects first-quarter 2020 same-store sales to decline in the range of mid-to-high-single digits.
The company further added that it is very difficult to anticipate the impact of coronavirus on its future results. Nevertheless, the company expects second-quarter 2020 same-store sales to decline more than the first-quarter on account of increase in coronavirus cases.
Shares of this Zacks Rank #5 (Strong Sell) company have fallen 28.5% in the past month, compared with the industry’s decline of 12.5%. The decline can be primarily attributed to concerns regarding the coronavirus outbreak.
Coronavirus to Hurt Restaurant Traffic
The restaurant industry has been facing declining traffic for quite some time now. According to Black Box Intelligence (formerly TDn2K), restaurant industry’s same-store sales declined 0.1% in fourth-quarter 2019. We believe the coronavirus outbreak will further hurt traffic and sales in the coming quarter. Many companies have hinted about business disruptions in China and across Asia due to the deadly virus spread. The companies have also warned of soft sales trends on account of increased restaurant closures.
Major restaurant companies like Starbucks Corporation (SBUX - Free Report) , Yum China Holdings, Inc. (YUMC - Free Report) and McDonald's Corporation (MCD - Free Report) will also be hurt by this deadly virus.
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Yum! Brands Expects Coronavirus to Mar Q2 Sales More Than Q1