(Reuters) – Yum Brands Inc. (YUM.N) outperformed Wall Street's third quarter sales and earnings estimates on Wednesday as strong sales at KFC and Taco Bell more than offset further weakness at Pizza Hut and their shares rose more than 4 percent.
A Kentucky Fried Chicken (KFC) fried chicken bucket can be seen in this image illustration on April 6, 2017. REUTERS / Carlo Allegri
Competition between major US fast-food chains has intensified as Yum, McDonald's Corp. (MCD.N) and Domino's Pizza Inc. (DPZ.NTry to attract cash-conscious customers with dollar menus, discounts and new breakfast items.
Taco Bell, Yum's fastest-growing brand, launched $ 1 Nacho chips and a $ 1 Triple Melt Burritos and Nachos this year, boosting sales in the same restaurant by 5 percent this quarter. Analysts had expected a plus of 3 percent.
The same branch sales in the KFC division also increased 3 percent, exceeding expectations for growth of 2.13 percent, supported by strong performance in international markets including Russia, Thailand, the Middle East and India.
However, Pizza Hut remained a dark spot for the company as sales in the same restaurants fell 1 percent due to declines in the United States, where it faces intense competition.
The chain has been trying to turn around in the United States by inciting promotional offers such as the big two-topping pizza for $ 5.99.
The company's executives pointed out that Pizza Hut's after-sales results became known after a profit after the win. Greg Creed, chief executive officer, said the promotions are not clear enough to attract new customers.
Excluding one-off income, Yum earned $ 1.04 per share, exceeding analysts' average expectation of $ 83 (according to Refinitiv estimates).
Yum's net income for the three months ended September 30, increased 8.6 percent to $ 454 million.
Total revenue declined 3 percent to $ 1.39 billion, but also outperformed the analysts' average estimate.
The company's shares rose 3.6 percent on Wednesday to $ 89.50. The stock has gained nearly 6 percent this year.
Reporting by Aishwarya Venugopal in Bengaluru; Arrangement by Arun Koyyur, Saumyadeb Chakrabarty and Sweta Singh