For its US stores, which number about 21,000 units, same-store sales rose 1%. Taco Bell was the leader, rising 5%, followed by KFC's 2% increase. However, Pizza Hut took a hit, and comps for the chain fell 7%.
"I can assure you we are putting a full-court press on making progress at Pizza Hut," said David Novak, Yum's chairman and chief executive officer, during a conference call. The company is now instituting a turnaround plan for the chain, and Novak says that it could turn in favorable results as early as the fourth quarter. He blames Pizza Hut's slide on high energy prices and consumer credit costs.
In all, US stores revenues were $1.33 billion, falling from $1.38 billion from the same year-ago period, due to the sale of restaurants to franchisees. The domestic units had a profit of $194 million, up from $185 million.
The company is experiencing rapid growth in its China Division, where it operates about 1,900 restaurants in China, Taiwan, Thailand. Executives are planning to open a total of 400 new units in the region this year. Total revenues in China were $363 million, up 21%, and it pulled in an operating profit of $57 million. Same-store sales soared, rising 16%.
In all other foreign countries, Yum! plans to open 750 new units this year, up from just over 11,400. Same-store sales in those restaurants were up 4%. Total revenues were $489 million, up 8%.
Management has increased its earnings per share outlook for the year to $2.83, up from a prior forecast of $2.81. Next year executives also expect to open more than 1,000 units outside of the US.
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