The move comes as parent Yum Brands -- in part due
to its woes in China -- said third-quarter profit fell 68%. Net
income decreased to $152 million, or 33 cents a share, from $471
million, or $1, a year earlier, the Louisville, Kentucky-based
company said in a statement. It also cut its 2013 earnings forecast
as same-store sales dropped in the Asian nation.
Yum, which gets about three-quarters of its revenue from outside
the U.S., is facing more competition from expanding restaurant
chains, such as Dicos and Hua Lai Shi in China. It's also facing a
backlash from consumers there after an outbreak of avian flu scared
diners away from poultry and a former chicken supplier was
investigated for selling food with too much antibiotics.
"It's just taking a little longer than we expected" for China to
recover, Jonathan Blum, a Yum spokesman, said in an interview with
Bloomberg News. While consumer trust in KFC has improved in the
Asian country, "it's not exactly back to where it was," he
Yum lowered its forecast for 2013 earnings, citing
"lower-than-expected China sales and a higher-than-expected
full-year tax rate." Full-year earnings excluding certain items
will decline at a "high-single to low-double-digit" percentage rate
from the prior year, the company said. Yum previously said earnings
would decline at a "mid-single-digit" rate.
The fast-food company also cut its forecast for China, saying
fourth-quarter same-store sales there will "unlikely" be positive.
Yum last month forecast growth in comparable-store sales for the
"Sales have not yet fully recovered from the adverse publicity
surrounding the December poultry supply incident," the company said
in yesterday's statement.
Yum, which has more than 6,000 KFC, Pizza Hut and other stores
in China, has been trying to attract customers there with an ad
campaign telling people it's safe to eat properly cooked chicken.
The company, which is targeting young families with the
advertisements, also is promoting other proteins in China such as
shrimp and mushroom rolls.
Same-store sales were unchanged in the U.S. in the third
quarter, while analysts estimated a 1.5% increase, according to
Consensus Metrix, a researcher owned by Wayne, New Jersey-based
Kaul Advisory Group. Same-store sales also were unchanged in India
and advanced 1% at other international stores.
Comparable-store sales are considered an indicator of growth
because they include only older, established locations.