Yum Brands is crashing

Akin Oyedele
0
kfc pizza hut yum china
kfc pizza hut yum china

(REUTERS/Joe Tan)

Yum Brands is the latest reason to be worried about China.

Shares of the fast-food giant fell as much as 19% in after-hours trading Tuesday after the company reported earnings below expectations and cut its outlook.

Yum Brands is seen as a bellwether for the Chinese economy, given that about 54% of its sales were derived from the country.

"While it remains difficult to forecast China sales, we are now estimating full-year same-store sales to be low-single-digit negative," the fast-food giant said in its third-quarter earnings statement.

"The pace of recovery in our China Division is below our expectations," Yum Brands said.

CEO Greg Creed said the company faced more challenges than it had expected in the second half of the year in China. Still, same-store sales in China increased 2% and restaurant margins were 20%.

The company's restaurant chains include KFC, Taco Bell, and Pizza Hut. It reported adjusted earnings per share of $1, versus the estimate for $1.06, according to Bloomberg. Revenues came in at $3.43 billion, versus the expeceted $3.67 billion.

The stock is up 14% year-to-date.

Screen Shot 2015 10 06 at 4.25.23 PM
Screen Shot 2015 10 06 at 4.25.23 PM

(Google)

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