Yum China Holdings Reports Lower-Than-Expected Revenue in Q2

Yum China Holdings Inc. (YUMC) experienced a more than 3% drop in shares during the extended session on Monday. The company, which operates popular fast-food brands such as KFC and Pizza Hut in China, reported lower-than-expected revenue for the second quarter, sparking concerns among investors about its performance in the upcoming third quarter.

In the second quarter, Yum China earned $197 million, or 47 cents a share, compared to $83 million, or 20 cents a share, in the same period last year. The company's revenue showed a 25% increase, reaching $2.65 billion.

Analysts surveyed by FactSet had anticipated earnings per share of 46 cents on revenue of $2.72 billion.

"As we move into the third quarter, driving sales remains our top priority," stated Chief Financial Officer Andy Yeung. The company has strategized to "seize" sales opportunities during the peak summer season. However, Yeung pointed out that last year's record third-quarter restaurant margins set a high benchmark due to temporary reliefs and austerity measures.

Despite the second-quarter results, Yum China maintained its fiscal 2023 outlook without any changes. The company plans to open approximately 1,100 to 1,300 new stores and expects capital expenditures ranging from $700 million to $900 million.

Yum China shares had a positive performance at the end of regular trading, gaining 2.1%.