Yum China Holdings, Inc. (NYSE:YUMC) shares are trading higher after the company reported second-quarter results yesterday. Revenue increased 1% year over year to $2.68 billion, missing the consensus of $2.77 billion.
Total system sales rose 4% Y/Y, excluding currency effects, due to an 8% increase of in net new units.
Same-store sales were at 96% of last year's level, with same-store transactions up 4% Y/Y in the quarter. Delivery sales increased 11% YoY, continuing Yum China's decade-long double-digit growth trend.
Digital sales hit $2.2 billion in the quarter, with digital ordering comprising about 90% of total company sales.
KFC's system sales grew 5% YoY, driven by an 8% contribution from new units, while Pizza Hut's system sales rose 1% YoY, also boosted by an 8% increase from new units.
Core operating profit grew 12% Y/Y to $275 million, with a margin of 10.0% vs. 9.3% a year ago quarter. EPS $0.55 surpassed the street view of $0.47.
As of June 30, 2024, the total store count was 15,423, comprising 10,931 KFC and 3,504 Pizza Hut locations. The company added 401 net new stores in the quarter, with 99 opened by franchisees.
In the second quarter, Yum China returned $249 million to shareholders through share repurchases and cash dividends.
Joey Wat, CEO of Yum China, said, "We achieved our most profitable second quarter since the spin-off, with core operating profit growing by 12% despite challenging industry dynamics. Our sharp focus on value-for-money and innovative new products worked well, driving robust same-store transaction growth."
Outlook: Yum China reiterated FY24 targets and plans to open 1,500 to 1,700 new stores, invest $700 million to $850 million in capital expenditures, and return $1.5 billion to shareholders through dividends and share repurchases.
Apart from this, Yum China disclosed that Chief Financial Officer Andy Yeung will resign for personal reasons, effective September 30, 2024. Adrian Ding will serve as Acting CFO starting October 1, 2024.
Yum China also announced the appointment of Mikel Durham to the Board of Directors, effective August 12, 2024. In connection with the appointment, the size of the Board was increased to 12 directors, ten of whom are independent.
Investors can gain exposure to YUMC via Invesco Golden Dragon China ETF (NASDAQ:PGJ) and Global X MSCI China Consumer Discretionary ETF (NYSE:CHIQ).
Price Action: YUMC shares are up 8.39% at $32.30 premarket at the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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