Yum China stock falls as fast-food chain in China reports lower sales

Shares of Yum China Holdings Inc.
YUMC,
+2.11%
dropped more than 3% in the extended session Monday after the operator of KFC, Pizza Hut and other fast-food brands in China reported lower-than-expected second-quarter revenue and seemed to temper investors’ expectations for its third quarter. Yum China earned $197 million, or 47 cents a share, in the quarter, compared with $83 million, or 20 cents a share, in the year-ago period. Revenue rose 25% to $2.65 billion, the company said. Analysts polled by FactSet were looking for EPS of 46 cents a share on revenue of $2.72 billion. “As we move into the third quarter, driving sales remains our top priority,” Chief Financial Officer Andy Yeung said. The company plans to “seize” sales opportunities in the peak summer season, but “it is worth noting that last year’s record third-quarter restaurant margins set a relatively high benchmark, due to austerity measures and temporary reliefs,” Yeung said. Yum China kept its fiscal 2023 outlook unchanged, looking to open about 1,100 to 1,300 new stores in net and for capital expenditures in a range of about $700 million to $900 million. The stock ended the regular trading day up 2.1%.