Yum Brands Inc (NYSE: YUM) opened more than 1.5% down in the stock market this morning but then recovered almost entirely after reporting market-beating results for its fiscal third quarter.
CEO Gibbs’ interview with CNBC’s ‘Squawk on the Street’
On CNBC’s “Squawk on the Street”, CEO David Gibbs said sales at all brands came in better than 2019 equivalents (pre-pandemic) in Q3 and attributed the initial decline in the stock price to “inflated expectations” and the fact that shares have already had a good run this year. He also said:
We had $5.0 billion in digital sales this quarter, making up 40% of the total sales, which was particularly impressive since our dine-in business was returning, up $600 million in Q3. You would’ve thought that would pressure digital sales; not the case.
The QSR sector has been facing pressure from labour shortages, particularly in the U.S. Gibbs agreed that such was a challenge for Yum Brands as well, but said the company culture of committing to helping employees grow professionally was easing the situation.
One of our Franchisee does a why are you staying here survey. Not asking exiting employees why they left, but asking current employees why they stay, so they can lean in on things that make employees stay with us.
In an environment where it’s getting difficult to fill up job vacancies, he added, it’s even more important to retain the employees that we already have.
Key takeaways from Yum Brands’ Q3 financial results
Yum said its net income printed at $528 million that translated to $1.75 per share. In the comparable quarter of last year, its net income was capped at a much lower $283 million or 92 cents per share. On an adjusted basis, the owner of prominent brands like KFC, Pizza Hut, and Taco Bell earned $1.22 per share.
The fast-food company generated $1.606 billion in revenue that translated to an annualised growth of 11%. According to FactSet, experts had forecast $1.08 of adjusted EPS on $1.590 billion in revenue.
Same-restaurant sales, as per the earnings press release, climbed by 5.0% in the third quarter. System sales were up 11% at KFC, 8% at Taco Bell, and 4% at Pizza Hut.