Yum! Brands takes a hit after forecasting slide in China sales

Dec. 3, 2012 | by Alicia Kelso

Yum! Brands' shares fell nearly $7 week over week after the company announced its fourth quarter and 2013 forecast, which included an anticipated 4 percent decline in same-store sales in China in Q4. China is the company's strongest division.

However, Yum! Brands reconfirmed its full-year 2012 EPS growth forecast of at least 13 percent, or $3.24 per share, excluding special items. David Novak, chairman and CEO, said stronger-than-expected operating performances at Yum! Restaurants International and the U.S. division is expected to offset soft sales in China during Q4.

"We now expect same-store sales to be negative (in China) as we overlap 21 percent same-store sales growth from last year. Full-year same-store sales growth in China is expected to be 6 percent. Next year will be another strong year for our China division, given this year's record development of at least 800 new units and significant innovation in the pipeline, underpinned by world class operations. We are extremely confident Yum! China remains the best growth story in the restaurant industry," he added.

Also this week, cheese and gas prices continued a modest slide, while wheat ticked back up.


Average block cheese prices dropped again last week on the Chicago Mercantile Market, averaging $1.80 from $1.82 the week prior. Cheese was above $2 last month.

Prices closed at $1.82 Monday through Thursday and at $1.76 on Friday.


Wheat prices inched up last week, averaging $9.27 on the Minneapolis Grain Exchange, from $9.12 the week prior. Wheat remains nearly $2 higher than it was in the summer, when prices averaged $7.49.

Prices closed at $9.15 Monday, $9.36 Tuesday, $9.38 Wednesday, $9.31 Thursday and $9.18 on Friday.

Gasoline and diesel fuel

Today's nationwide average for regular unleaded fuel is $3.38, a 4-cent drop from $3.42 last week.

According to the AAA and the Oil Price Information Service, prices a month ago were $3.48. Last year at this time, consumers were paying $3.28 at the pump.

Today's mid-range unleaded is $3.55, down from $3.59 last week. Premium gas is $3.70, from $3.73 last week.

Diesel fuel prices remained flat from last week, at $4.01. The price of diesel fuel is down from $4.03 last month and up from $3.94 last year.

Natural gas

Natural gas prices over the report week generally rose in most locations across the country. The Henry Hub price rose 11 cents from $3.59 per million British thermal units (MMBtu) on Nov. 21, to $3.70 per MMBtu on Nov. 28.

The natural gas New York Mercantile Exchange (NYMEX) near-month futures price, in contrast, fell over the report week, from $3.903 per MMBtu Nov. 21 to $3.696 per MMBtu Nov. 28.

Pizza company stocks

Shares of Pizza Hut parent Yum! Brands Inc. dropped 10 percent last week, closing at $67.08 on Friday, from $74 the week prior. This was after the company updated its fourth quarter and 2013 guidance that included soft sales in China, its strongest division. The company hit its 52-week high in May at $74.44. Its 52-week low is $53.65 from a year ago.

Domino's closed last Friday at $41.60, down slightly from $41.69 the week prior. The company's 52-week high was $42.63 in April. Shares remain higher over this time last year when the company traded at $28.17.

Papa John's closed out last week $52.93, a jump from $51.34 the week prior and nearly $6 higher than two weeks ago, when shares dropped after news broke of a lawsuit claiming that the chain sent unsolicited text messages to customers. PZZA hit its 52-week high at $56.41 after a strong Q2 earnings report in early August. The company hit its 52-week low of $35.89 a year ago.

CEC Entertainment Inc., parent company of Chuck E. Cheese restaurants, closed out last week at $31.30, up nearly a dollar from $30.37 the week prior. The company's 52-week high was $40.01 in March. Its 52-week low was $28.23 a year ago.

Pizza Inn inched up to $3.27 last week, from $3.19 the week prior. PZZI hit its 52-week high of $7.07 in December and traded as low as $2.18 in June.

Read more about equipment and supplies.

Topics: Cheese , Chuck E. Cheese's Pizza , Domino's Pizza , Equipment & Supplies , Operations Management , Papa John's , Pizza Hut , Pizza Inn

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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