Yum China Q3 revenue misses estimates as comparable sales decline

Yum China Holdings YUMC shares were trading about 4.5% lower in the premarket trading on Tuesday after the KFC and Pizza Hut operator reported an unexpected 3% decline in third-quarter same-store sales, missing the Bloomberg consensus estimate for 1.1% growth.

Comparable sales fell 3% at both KFC and Pizza Hut, against expectations for increases of 1% and 1.33%, respectively. YUMC cited tough comparisons with last year's delivery platform subsidies and adverse weather in August.

However, same-store transactions rose 3% for the 15th consecutive quarter, while management said dine-in and takeaway performance improved sequentially.

Adjusted earnings increased to $0.91 per share from $0.76 a year earlier, beating the $0.90 estimate. Revenue rose 8.5% to $3.48 billion but came in below the $3.51 billion consensus. Adjusted operating profit climbed 13% to $451 million, topping the $448.5 million estimate.

Restaurant margin expanded 50 basis points to 17.8%, above the 17.2% estimate, helped by streamlined operations and favorable commodity prices. KFC revenue rose 8% to $2.60 billion, while Pizza Hut revenue increased 4.7% to $665 million, missing the $697 million estimate. Pizza Hut operating profit rose 29% to $73 million, partly benefiting from lower license fees.

Yum China YUMC opened a record 692 net new restaurants during the quarter, taking its total to 19,989. It raised its 2026 target to more than 2,400 net openings and over 20,500 stores, from more than 1,900 and 20,000 previously. Capex guidance remained $600 million to $700 million.

The company returned $362 million to shareholders in the quarter and remains on track to return $1.5 billion in 2026. It declared a quarterly dividend of $0.29 per share, payable December 22 to shareholders of record December 1.

Seperately, Yum China YUMC appointed former GE General Counsel and Eos Energy EOSE director Alexander Dimitrief to its board, effective November 4.

Shares are down 1.38% year to date, compared with a 10.2% gain in the broader index. Short interest on YUMC stands at 1.74% of the total float.