Yum China’s shares rose 1.6%, a roughly flat reaction. Third-quarter sales and profit increased year over year, while same-store sales remained below the prior-year level amid tough comparisons and August weather; margin gains and record new-store additions partly offset that softness.
- System sales grew 3% excluding foreign exchange, and core operating profit rose 6%. In reporting currency, revenue increased 8%, operating profit 13% and diluted EPS 20%, partly supported by favorable FX.
- Same-store sales were 97% of the prior-year level, while same-store transactions grew for the 15th consecutive quarter. Management cited last year’s delivery subsidies and extreme weather in August as factors weighing on sales.
- Restaurant margin improved 50 basis points and operating profit margin 40 basis points year over year, supported by operational efficiencies and, in part, Pizza Hut license-fee savings after the Mainland China acquisition.
- Yum China added close to 700 net new stores in the quarter, a quarterly record, and reached 20,000 total stores. Active members rose 6% year over year to 278 million.
- KFC system sales grew 3% and operating profit 4%; same-store sales were at 97% of the prior year, with transactions up 3% and average ticket down 5% to 36 yuan.
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