Yum China Holdings Inc. shares rose in the extended session Wednesday after the operator of KFC, Pizza Hut and other fast-food brands in China beat fourth-quarter expectations and warned it sees “significant headwinds” in the first quarter due to a COVID-19 resurgence in certain regions of China.
Yum China YUMC, -2.09% said it earned $151 million, or 35 cents a share, in the quarter, from $90 million, or 23 cents a share, in the year ago quarter. Adjusted for one-time items, Yum China earned $153 million, or 35 cents a share.
Sales rose 11% to $2.26 billion, the company said. Same-store sales declined 4% year-on-year, with declines of 4% at KFC and 5% at Pizza Hut, the company said.
Analysts polled by FactSet had expected the company to report adjusted EPS of 27 cents a share on sales of $2.17 billion.
To counter the pandemic’s impact, the company ran promotions to drive traffic. Delivery and pickup remained popular, it said. “However, the pace of recovery was uneven and non-linear,” thanks to regional resurgences of COVID-19 cases, the company said in a statement. That impact has continued into the first quarter, Yum China said.
For Lunar New Year’s travel season in China, which started late last month, the number of travelers has declined about 70%, which affects Yum China’s locations at transportation hubs and tourist attractions.
“The important Chinese New Year holiday season will be subdued, with sales impacted by substantially less travel, smaller gatherings and generally reduced social activities,” the company said.
