Yum Brands Inc. on Tuesday cut its profit outlook for the year because sales in China are recovering more slowly than the company expected after a food-safety scare.
Shares of the owner of the Taco Bell, KFC and Pizza Hut restaurant chains fell 5 per cent in extended trading.
Yum is trying to recover from a TV report this summer that showed one of its suppliers there allegedly using expired meat. The company noted it was hurt by the controversy even though it got a limited number of products from the supplier in question, a unit of OSI Group.
The restaurant operator said that its sales in China are not rebounding as quickly as expected. It anticipated that a key retail metric, revenue from stores open a year, will fall by a “mid-single-digit” in China this year.
As a result, it expects earnings per share for 2014 to grow by a “mid-single-digit” percentage — the second cut this year. Yum had initially forecast a 20 per cent gain for 2014 but in October lowered that to a 6 to 10 per cent gain.
Yum, which is based in Louisville, Kentucky, anticipates earnings per share growth of at least 10 per cent for 2015.
Shares fell $3.71 to $71.60 in after-hours trading. The stock has gained nearly 5 per cent over the past 12 months.
