On March 1st, YUM! Brands (YUM) reported on Q1 FY 2024 ending March 31st. Results for the quarter were disappointing, below Zach’s estimates by 6.6 percent for revenue and 12 percent for EPS. For the period, the Company posted net income of $314 million on an unexpectedly low revenue of $1,598 million, including company sales, franchise fees and advertising, generating a diluted EPS of $1.10. Comparative values for Q1 FY 2023 were net earnings of $300 million on revenue of $1,645 million with a diluted EPS of $1.05.
Revenue fell 2.9 percent from Q1 FY 2023. Operating margin increased from 31.7 percent to 32.5 percent for the most recent quarter.
Digital sales attained $8 billion in Q1 FY 2024 approaching 50 percent of sales.
During Q4 2023 the holding Company purchased 218 KFC restaurants in England and Ireland that have been integrated into the Company.
The KFC division comprising 30,251 restaurants posted a two percent decline in same-store sales This division generated an operating profit of $313 million achieving an operating margin of 49.5 percent. Of total KFC sales expressed as a percentage, China attained 27; U.S.,15; Europe, 11 and the remainder from Asia, Africa and the Middle East. KFC opened 509 restaurants in Q1.
The Pizza Hut division comprising 19,942 restaurants posted a seven percent decline in same-store sales. Thus division generated an operating profit of $93 million with an operating margin of 39 percent. Of total Pizza Hut sales expressed as a percentage, U.S. attained 41; China.,18; Europe and Asia, 13 each. Pizza Hut opened 240 new restaurants during Q1.
The Taco Bell division comprising 8,555 restaurants posted a one percent increase in same-store sales with system operating profit of $208 million attaining an operating margin of 34.8 percent. During Q1, 55 new restaurants were added.
In commenting on results David Gibbs, CEO stated “Despite a difficult operating environment, we delivered 6 percent Core Operating Profit growth demonstrating the resilience of our business model. As expected, same-store sales were pressured this quarter, but we are encouraged by strong 2-year same-store sales growth and positive momentum exiting the quarter. First-quarter unit growth was robust with over 800 new unit openings, leading to 6 percent unit growth and positioning us to surpass 60,000 restaurants this year. Our digital sales mix reached a new record, exceeding 50 percent for the first time in our history. Our world-class franchisees, globally iconic brands, and distinctive digital capabilities give me high confidence in our future growth."
On March 31st 2023 Yum Brands posted total assets of $6,224 million including goodwill and intangibles of $1,011 million against long-term debt of $11,130 million and an accumulated shareholders’ deficit of $7,856 million. Yum Brands! had a market capitalization of $38,100 million on May 2nd. The share has traded over 52 weeks in a range of $115.53 to $143.20 with a 50-day moving average of $138.23. On a trailing 12-month basis, operating margin was 31.4 percent, profit margin 22.6 percent with a return on assets of 24.7 percent. YUM! is held primarily by institutions that collectively hold 86.0 percent of equity.