Yum China misses revenue forecast, then lifts its store target and buyback
The KFC and Pizza Hut operator adds $1bn to its repurchase authorisation and plans to return about all free cash flow to shareholders from 2027.
Yum China, which runs KFC and Pizza Hut in China, reported third-quarter revenue of $3.48B, short of the $3.57B expected. Earnings per share of $0.91 were in line with forecasts.
Chief executive Joey Wat said same-store sales faced pressure from tough comparisons with last year's delivery platform subsidies and from bad weather in August. Wat said the company still captured extra demand from smaller orders and solo dining.
The weakness looks specific to China. Yum! Brands, the separate company that licenses the two brands to Yum China, cited record unit development in the US and momentum at Taco Bell for the same quarter. Yum China's response suggests management is leaning on the balance sheet and on store openings to offset a softer top line.
It raised its 2026 target to over 20,500 total stores, or more than 2,400 net new stores. Franchise operators are to account for 40-50% of net new stores at both KFC and Pizza Hut. Capital expenditure is expected at about $600m to $700m for the year.
The company remains on track to return $1.5bn to shareholders in 2026. The board added $1bn to the share repurchase authorisation, leaving about $1.3bn available. From 2027 it plans to return approximately 100% of annual free cash flow after dividends to noncontrolling interests. It puts that at an average of $900m to over $1bn across 2027 and 2028, and above $1bn in 2028.
A cash dividend of $0.29 per share is payable on December 22 to shareholders of record on December 1.
© Raydn · raydn.us
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