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Cash-strapped consumers are not splurging on pizza and chicken, and that’s hurting sales at restaurant company Yum Brands.
Shares of Yum brands were down by nearly 5% in early hours, trading at $135, after the company reported a decrease in sales for its Pizza Hut and KFC divisions.
The Louisville, Kentucky-based company missed Wall Street’s expectations, having generated $1.6 billion in revenue — about $1.15 earnings per share — in the first quarter. Analysts had predicted it would make $1.71 billion, approximately $1.20 earnings per share, according to FactSet.
Yum Brands, which also owns Taco Bell, reported that same-store sales worldwide declined by 3%, with KFC and Pizza Hut declining 2% and 7%, respectively. Meanwhile, its Taco Bell unit saw sales increase by just 1%, it added.
The decline in sales for Yum Brands may in part be tied to a decline in discretionary spending from consumers more broadly. Just a day ago, McDonald’s CEO Chris Kempczinski said the company was also grappling with a fall in sales as consumers looked to stretch every dollar.
But even so, Yum Brands said it anticipated the decline, according to chief executive officer David Gibbs.
“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,” Gibbs said in the company’s earnings release.
Not all was gloomy for Yum Brands. For the first time ever the company saw its digital sales make up over 50% of total sales, approaching $8 billion.
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