Yum China Quashes Estimates as Pizza Hut, KFC Sales Soar

Yum China Holdings Inc. reported it beat sales estimates in the fourth quarter, raking in more sales in the same period than the previous year. The company launched new deals to entice diners in the country to buy despite the economic decline in the more significant part of China, and this move contributed to increased sales.

KFC and Pizza Hut Show Sales Surge

According to Bloomberg, ahead of estimates of 3.24%, Yum China's comparable sales were four percent, and the adjusted earnings per share exceeded expectations. The fast-food restaurant company further reported that its revenues from KFC stores also increased by 18% year-on-year to $1.87 billion. Its Pizza Hut chain also soared by 23% to $496 million.

Overall, the company's sales grew by 17% based in the US postmarket trading on Tuesday, Feb. 6. The growth was observed after Yum China started offering regular promotions and special discounts to revive sales.

"2023 was a pivotal year for Yum China and not only did we demonstrate strong resilience during the pandemic, but we also seized opportunities that arose from China's reopening," Yum China's chief executive officer, Joey Wat, said in a press release. "In 2023, our system sales grew by 21%, surpassing the industry's growth rate, and we set new records for both revenue and profits."

Yum China to Reward Investors

Yum China's shares also rallied after hours on Tuesday after it revealed its plans to increase shareholder returns in 2024. The company made this declaration even though other restaurants warned that demand in the region is declining, as per Market Watch.

The company disclosed that its board announced a 23% increase in its cash dividend to 16 cents a share, payable on Mar. 26. Moreover, it will also buy back $1.25 billion in its stock this year.

"Our return to shareholders through cash dividends and share repurchases in 2023 was the highest since the spinoff," the Yum China CEO said. "Leveraging our distinctive strengths, including brands deeply ingrained in China, remarkable agility and robust operational execution, we are well-positioned to achieve our growth targets for 2024-2026 and deliver excellent returns to our shareholders through increased cash dividends and stepped-up share buybacks."

Photo by: Spencer Scott Pugh/Unsplash