Yum! Brands: Reports Q2-2020 Financial Results

Louisville / KY. (yb) Yum! Brands Inc. reported results for the second-quarter ended June 30, 2020. Worldwide system sales excluding foreign currency translation declined (12) percent, with a (15) percent same-store sales decline and 3 percent net-new unit growth. Second-quarter GAAP EPS was USD 0.67, a decrease of (27) percent over the prior year quarter. Second-quarter EPS excluding Special Items was USD 0.82, a decrease of (12) percent over the prior year quarter.

Commentary

Greg Creed, CEO, said, «While second-quarter results were meaningfully impacted by Covid-19, I couldn’t be prouder of how our brands adapted with remarkable agility, leveraging consumer insights and digitally enabled off-premise capabilities to adjust operations, menu options and marketing across the globe. Digital sales were a big driver of the dramatic improvement in sales from the initial impact of Covid-19, reaching an all-time high of USD 3.5 billion for the quarter, an increase of more than USD 1 billion over the prior year. World-class operations, including rapid implementation of contactless options, supported a steady pace of store reopening through the quarter, with approximately 95 percent of our global system restaurants now at least partially open. Same-store sales trends for open stores stabilized in June just a few points short of flat, despite the majority of our dining rooms still remaining closed, and these trends have continued into July.

«As we continue to reopen our restaurants across the globe, we remain focused on our Recipe for Growth and Good strategy and on ensuring customers can access our delicious food in a safe, low-contact manner with outstanding value. Leveraging our scale and capabilities as the world’s largest restaurant company, our four iconic brands are optimally positioned to drive profitable system sales growth in the new customer environment. While Covid-19 has presented incredible challenges for the entire restaurant industry, I remain confident in the power and resiliency of our unique and highly diversified global business model and that we will emerge an even stronger growth company for all our stakeholders.»

Second Quarter Highlights

  • Worldwide system sales excluding foreign currency translation declined (12) percent, with KFC at (18) percent, Pizza Hut at (10) percent and Taco Bell at (6) percent.
  • We reported 3 percent year-over-year net unit growth and net units declined (118) during the quarter.
  • We recorded USD 84 million of pre-tax investment income related to the change in fair value of our investment in Grubhub, which resulted in a USD 0.21 benefit to EPS on the second-quarter. As we recorded USD 24 million of pre-tax investment income in the second-quarter of 2019 for a USD 0.06 benefit to EPS, our Grubhub investment favorably impacted year-over-year EPS growth by USD 0.15.
  • Foreign currency translation unfavorably impacted divisional operating profit by USD 6 million.

For additional information please read the company’s PDF file below (119 KB):

20200803-YUM-Q2-2020.